Oral Answers to Questions

EDUCATION AND SKILLS

The Secretary of State was asked—

"Youth Matters"

Stephen Hesford: How she expects proposals in the "Youth Matters" Green Paper will provide incentives for young people to engage in positive activities.

Beverley Hughes: We want to put more power into the hands of young people to give them more say. We will support local authorities to pilot opportunity cards to enable young people to take part in more positive activities, and we will provide a local opportunity fund, backed by a capital fund, to be spent in conjunction with young people. We will ensure that provision meets national standards and responds to local demand by placing a statutory duty on local authorities to secure access for young people to positive activities.

Stephen Hesford: I am obliged to my right hon. Friend for that answer. I welcome the Green Paper "Youth Matters", but more importantly students in my constituency welcome it. As she may know, I have carried out a consultation in four schools in my constituency, three of which I have visited and one of which has made a written submission. In the light of the enthusiasm that they have shown for the questions posed by this enlightened Green Paper, will she assure me that the avalanche of responses that she will have from my students will be fully taken into account?

Beverley Hughes: Indeed I can. I thank my hon. Friend and colleagues throughout the House who did a great deal during the summer months to talk to young people and to give them the young people's version of the questionnaire, which I am sure has made a big difference to the number of responses. We have had about 3,000 responses so far from young people alone,   and I expect that to double by the end of the consultation. Young people are broadly very positive about the proposals in the Green Paper and we shall certainly take their views into account when we give our response.

Edward Miliband: Will my right hon. Friend comment on the role that the Green   Paper can play in engaging young people in services? The all-party group on youth affairs met for the first time in this Parliament yesterday and had a lively and interesting discussion with the young people who attended. One of the points that they raised was their hope that the Government's vision included not just demand-side subsidies through the opportunity card, but a commitment to supply-side investment in young people's services. Will my right hon. Friend reassure me that in the years ahead the Government will be making more of a priority of investment in young people's services?

Beverley Hughes: The supply-side mechanisms that we have included in the Green Paper are important, precisely because they will require local authorities and others to take account of which activities young people decide to take up. So that has been an important ingredient. However, I take my hon. Friend's point that the supply side is also important. It is encouraging to note that during 2003–04 and 2005–06 local authorities increased their funding by 12 per cent. and the out-turn for 2003–04 was considerably higher even than the budget requirement. There is a growing recognition that more needs to be done to invest in activities and opportunities for young people, and local authorities are taking that very seriously.

Tim Farron: What does the Minister think that it says about the Government's commitment to young people's participation in democracy that we invest in giving citizenship education to young people up to the age of 16, but deny them the right to use a vote until they are 18?

Beverley Hughes: Clearly, there are many views on the issue. I spent some time discussing it with young people   during the consultation process and there is considerable support for a vote at 16, but I do not think that anyone would want to introduce that until we could ensure that young people would use it in significant numbers. As we know, there are tremendous pressures on young people, and that is not top of the list for many 16 and 17-year-olds, although I accept that it is an issue for some. We will have to go down that route when we are sure that that is what the majority of young people would not only want but use.

Local Services (Young People)

Rosie Cooper: What measures she plans to put in place to enable young people to play a greater role in decisions on the provision of local services.

Phil Hope: Involving young people in decision making is essential if we are to ensure that services meet their needs, and local authorities are required to consult young people while developing their   children and young people's plan. As my right hon. Friend the Minister for Children and Families has just been saying, the new youth opportunity card, announced in the "Youth Matters" Green Paper, will   develop that involvement further. I urge all hon. Members to encourage their local authorities to involve young people in decision making. I draw attention to the participation works initiative, launched only yesterday, which provides online useful services to help young people involved in participation.

Rosie Cooper: In West Lancashire, there are 118 unemployed 16 to 18-year-olds and just 20 live vacancies. I want the local authority and various organisations and partnerships to be very much involved in planning services that best meet their training, education and employment needs. How can the Minister help me to do that?

Phil Hope: As my hon. Friend will know, young people become disengaged for a wide variety of reasons. They often need individual personal support to work out their needs and to gain access to opportunities such as education, training and jobs. My hon. Friend is right to suggest that local partnerships such as children's trusts should provide opportunities for young people to access those services at the best time and in the best place. She might like to consider ways in which young people can be involved in planning such services by taking part in discussion and working groups with youth workers and others to find out what their needs are and how to meet them. In Lancashire, some of those   partners are setting up an internet TV project to generate views about such issues so that services can be responsive to their needs.

Greg Clark: Is the Minister aware that in the City of Westminster the council recently threw open swimming pools across the borough for young people between the ages of 11 and 18 to use them after school free of charge? Is not that exactly the type of provision that should be available under opportunity cards, and will the Minister commend it to other excellent authorities around the country?

Phil Hope: I am glad that some of our policies are making a splash at last. We often identify examples of good practice where local authorities and partners listen to the needs of young people and open up opportunities for them to participate. That is a great thing to do. I only wish that in the Tories' manifesto at the last election they had bothered to mention the participation of young people—an absence that spoke volumes about the priority that they give to young people's needs.

Richard Burden: In light of what my hon. Friend says about the importance of involving young people, will he join me in welcoming an initiative in Northfield, where a young people's forum has been set up and given a budget top-sliced from money devolved from the city council? Does he agree that putting in such material resources can help, but that the challenge of reaching hard-to-reach young people involves more resources going into young people's services globally?

Phil Hope: My hon. Friend is right. It is good to hear of another example of local authorities devolving budgets to young people to enable them to take responsibility for resources and to work with other young people in their communities to ensure that their needs are met—particularly the needs of those who are disengaged or alienated from the education system.
	Another scheme that has been set up in various parts of the country is that of youth banks, whereby young people control resources and have to decide which grants should go to other groups of young people in the community. That is real empowerment of young people who are participating and taking more control over their own lives.

GCSE Results

Kerry McCarthy: What assessment she has made of the 2004–05 GCSE results.

Si�n Simon: What assessment she has made of the 200405 GCSE results.

Ruth Kelly: Provisional results for 2005 show that 55.7 per cent. of 15-year-olds achieved five or more GCSEs or equivalent at grades A* to C. That is an increase of two percentage points on last yearthe biggest year-on-year rise for more than a decade. It means that more than 63,000 more pupils are now achieving five good GCSEs or equivalent than did so in 1997. I congratulate pupils, teachers and their schools on that tremendous achievement.

Kerry McCarthy: Although GCSE results have improved across Bristol, we know that there is still some way to go. The same could be said of staying-on rates in full-time education for 16 and 17-year-olds, which stand at 74 per cent. and 58 per cent. respectively. Will the Secretary of State comment on how the proposals in the   White Paper will help to address that situation?

Ruth Kelly: My hon. Friend is absolutely right to draw attention to the scandalously low staying-on rates in this country. Britain has one of the lowest staying-on rates in the entire industrialised world, and Bristol has one of the lowest staying-on rates in Britain. We have to transform that. We have a target for improving staying-on rates from an average of 75 per cent. to 90 per cent. over the next 10 years. We will do that by introducing specialised diplomas that mix vocational and academic education and allow people to study subjects that interest them in the places that interest them in the ways that interest them.

Si�n Simon: Will the Secretary of State join me in congratulating College high school in my constituency? This year, its GCSE results improved by a phenomenal 200 per cent. to 34 per cent. good passes from a disastrous 11 per cent. last year. Will my right hon.   Friend reflect on the fact that the school is now finally fully staffed, successfully federated and making massive strides mainly because it has its third head in little more than two years? Schools should not trundle along in special measures while another generation of working-class kids gets written off. A failing school is not only a tragedy but an emergency. We cannot all go to Eton, can we?

Ruth Kelly: I send my personal congratulations to all the pupils and teachers at the school in my hon. Friend's constituency. It is a tremendous achievement, although I hope that it is only the first step on a long journey to securing even better results. My hon. Friend is right: in rare but nevertheless too many cases schools have languished in special measures, not only for one or two years but sometimes for five or six. That must come to an end. That is why I proposed in the education White Paper that if a school had not made rapid progress within a year of being put into special measures, something radical should be considered, including federating with a more successful school, which my hon. Friend gave as an example.

Mark Pritchard: Does the Secretary of State share my concern that many of those who attain five GCSEs do not study languages? Will she   give an undertaking to review the languages that are   taught in our schools? In the context of global competition, will she consider adding Chinese and Urdu to the curriculum? Let me stress that there are some working-class kids on the Conservative Benches, too.

Ruth Kelly: The hon. Gentleman is right to draw attention to the need to promote modern foreign language teaching in our schools. Chinese is one of the fastest-growing modern languages in schools, with more and more opting to teach it as a specialism. Perhaps the best way to make our children enthusiastic about modern foreign languages is to teach them at primary school. That is why we have made a commitment that, by 2010, every child over the age of seven should learn at least one foreign language at primary school.

Andrew MacKay: Does the Secretary of State accept that her first duty is to protect the integrity of the GCSE examinations? Does she further accept that results should never be massaged so that schools appear to be doing better than they are? That does a huge disservice to the pupils.

Ruth Kelly: I completely agree with the right hon.   Gentleman that we should preserve the integrity of   GCSEs. Recently, the director of education at the   Organisation for Economic Co-operation and Development reviewed our system for preserving the integrity of GCSEs and said that he knew of no more robust system in the world.

Anne Snelgrove: Will my right hon. Friend join me in congratulating Churchfields school in my constituency, of which I am a governor? It almost doubled its GCSE results from 26 per cent. in 200405 to just under 50 per cent. this year. Will she reassure me and my constituents that the Government will continue to support and promote with employers and parents vocational GCSEs as an equal alternative to traditional GCSE courses? That is what they want and value.

Ruth Kelly: I certainly send congratulations to Churchfields school on its remarkable success in improving its GCSE results. My hon. Friend is right; vocational qualifications are hugely important and they have been undervalued in this country for generations. We need to start taking them seriously. That is why, later this autumn, I shall publish a delivery plan for implementing our 14 to 19-year-old specialised diplomas. They will, for the first time, give our young people genuine chances to study vocational qualifications of a high quality, which lead on to the next qualification and can even take students into higher education.

Mark Hoban: Does the Secretary of State agree with last week's BBC research, which showed that not enough young people in our most improving schools were achieving A* to C grades in English and maths? Does she accept that the foundations of numeracy and literacy are laid at primary school, yet 44 per cent. of children leaving primary school are unable to read, write or count to the desired standard?

Ruth Kelly: The hon. Gentleman should study the record a bit more closely. Fifty-seven per cent. of our young people achieve the expected standard in reading, writing and arithmetic by the time they leave primary school. If we turn the clock back eight years, we find that figure reversed to 43 per cent. That achievement has been made after 50 years of no progress at all in raising primary school standards. Yes, I agree that we have to go further with English and maths, but I do not accept that schools have been downgrading their emphasis on those subjects because they are promoting vocational qualifications. Of course they must do more with English and maths; that is why we are making the GCSEs harder and why we are changing the league tables to ensure that schools reflect English and maths qualifications in the five GCSE results.

David Taylor: Sadly, earlier this week the Secretary of State for Education and Skills announced her plans to enfeeble and marginalise local education authorities. While she still has the opportunity, would she care to pay tribute to the county of Leicestershirewhich is not Labour controlledfor successively achieving record GCSE results despite persistently being the worst funded shire county authority under both the previous Conservative Administration and our own? Finance and results do not always go together.

Ruth Kelly: I have a lot of respect for my hon. Friend, who I know takes these issues extremely seriously. I pay tribute to the work that has been done in Leicestershire to achieve this year's record results and I hope that the county will move from strength to strength. I should like to reassure my hon. Friend that there is a real role for local authorities in the education White Paper. I should also like to cite the view of the Local Government Association, which stated that it welcomes the new strategic role that has been given to local authorities.

Education White Paper

Peter Bone: What discussions she had with the Prime Minister during the preparation of the education White Paper.

Ruth Kelly: I have had several constructive discussions with my right hon. Friend the Prime Minister.

Peter Bone: In Wellingborough, the Government have allowed a secondary school to be demolished, resulting in the overcrowding of all the other secondary schools, children being bussed out of the county for their education and others being left at home receiving no education at all. How does the Secretary of State reconcile that appalling record with her discussions with the Prime Minister?

Ruth Kelly: Our first duty is to ensure that every school is a good school. We have already halved the number of failing schools over the past eight years. GCSE results are at record levels this year, and we have seen their biggest rise for more than a decade. However, the hon. Gentleman is absolutely right to suggest that we have to go further. We have to enable schools to develop their own ethos, to link up with an external partner and to drive their results even higher. That is how we are going to promote choice in the systemby ensuring that every school is a good school and that all parents have the opportunity to choose between them.

David Clelland: The Secretary of State will be aware that many Labour Members have grave concerns about her proposals and cannot possibly support them in their present form. There is no question that she and the Prime Minister have the best interests of young people at heart, but many of us fear that the proposals could be damaging to   many young people in Tyne Bridge and similar constituencies up and down the country. Will she undertake to enter into meaningful discussions with colleagues, particularly on the Labour Benches, before she pins her colours too firmly to the mast in this White Paper?

Ruth Kelly: I can certainly give my hon. Friend that assurance. The proposals in the White Paper are about driving up standards across the board, but they are particularly about meeting the needs of the most disadvantaged pupils in our schools in the most disadvantaged areas. We will do that by ensuring that those schools have the opportunity to get really professional help, to federate with successful schools, and to develop a sense of purpose and mission. If we combine those measures with really good choice for all parents and with the extension of free school transport rights, we will serve the needs not only of the nation but of disadvantaged pupils in particular.

William McCrea: In further meetings with the Prime Minister, will the Secretary of State draw attention to the fact that there is great anger in Northern Ireland at the Government's plans to destroy grammar school education?

Ruth Kelly: I cannot sympathise with the hon. Gentleman's desire to have more selection in schools, or even to preserve the existing system of selection, particularly as that decision was, I understand, taken by the devolved Assembly.

Jeff Ennis: As my right hon. Friend and the Prime Minister are aware, there is concern on the Labour Benches, particularly about the concept of trust schools. Will she reassure me and some of my Labour colleagues on how trust schools will be required to take their fair share of children with special needs and children on free school meals, rather than cherry-picking the best students?

Ruth Kelly: My hon. Friend makes the important point that when schools set their own admissions framework it ought to be within a national system that ensures fairness for everybody. Right at the heart of the White Paper is that principlefair admissions together with fair funding and fair accountability.
	My hon. Friend is also right to point to the needs of particularly disadvantaged children within that process. I have said that I will shortly lay regulations before the House that will ensure that when looked-after children are considered, for example, they have top priority when it comes to determining admissions for any particular school. When a child has special educational needs, that child will have automatic right to the school that is named in their statement. By 2007, I expect all schools also to be taking hard-to-place pupils, again giving them priority in the system. I hope that, on those points, the concerns of my hon. Friends and others are allayed.

John Maples: I do not imagine that during discussions with the Prime Minister the Secretary of State had much time left over from putting out the row with the Deputy Prime Minister to discuss the problems in Stratford-on-Avon schools, but had she done so she would have found that there are   three schools, all of which are completely full. The situation is getting worse because of Government housing targets. The high school, which is in a new building, simply cannot expand; the girls and boys grammar schools could.
	In answer to a question on Tuesday, the Secretary of State said to me that she is continuing her predecessor's policy of not allowing the freedom of popular schools to expand to extend to grammar schools. So, we have a ridiculous situation in Stratford: the one school that cannot expand is free to do so and the two schools that   can expand are not free to do so. What do parental and community choice at local level mean if such blind prejudice overrides them?

Ruth Kelly: I am very sorry that the hon. Gentleman thinks that fair admissions are blind prejudice. Fair admissions are at the heart of what we stand for as a Labour Governmentfair admissions, fair funding and   fair accountability. He is absolutely right that I do not want grammar schools to expand. I said it clearly in this House and I will continue to affirm it at every opportunity in this House. Nor can I understand why the expansion of grammar schools in his constituency is the best way to meet need. If there is space at those grammar schools, there should be non-selective education built to meet the needs of children in that area.

Brian Iddon: My right hon. Friend knows that I wrote to her when she was   appointed to express my concerns over the choice agenda, particularly regarding the schools in her constituency and mine, and in Bolton's third parliamentary constituency. She is, of course, to allow good schools to expand. That will be detrimental to the schools in my constituency of Bolton, South-East. How does she define a good school?

Ruth Kelly: My hon. Friend is right to have concerns about his constituency, but those concerns are not substantiated in the White Paper. Indeed, in Bolton we have good leadership capacity expanding throughout the system, with the head teacher of Rivington and Blackrod high school becoming executive principal of Labybridge schoola new school that was in special measures over a number of yearsand driving up standards, including a 5 per cent. rise in GCSE results this year. It is now able to help other schools to improve as well.
	That is the system that I would like to be much more easily available to all schools in the country so that good leadership can expand, we can bring up the capacity of underperforming schools and every pupil has the opportunity to share in that success.

Edward Davey: Will the Secretary of State confirm that under the White Paper she is not proposing to make the admissions code legally binding on schools? Will she also confirm that under the White Paper every school in the country could become its own admissions authority and be able to set its own policy with her as the ultimate arbiter? If that is all true, how can we be confident about fair admissions, given her recent ruling on the Oratory school in which she backed selection by parental interviewagainst her own admissions code?

Ruth Kelly: The White Paper introduces no change on admissions apart from toughening up the admissions procedures. The hon. Gentleman points to the current situation for foundation schools whereby rather than the local authority setting the catchment area or determining admissions, the school does. It does that within a fair admissions code, however, which is backed up on a statutory basis by the adjudicator. The adjudicator can rule on whether that admissions code has been preserved or whether there was a very good reason why the school could not abide by the admissions code, in which case it is referred to the Secretary of State. In the case to which he refers, the advice that I was given was completely unequivocalthere was no room whatever for discretion for the particular circumstances that pertained at that school. I hope that he will accept that our proposals are based on fair admissions, unlike those of the Conservative party, which would return us to a system of selection.

Helen Jones: Does the Secretary of State accept that many of us have concerns about her White Paper, because it talks about schools as though they exist in isolation? If a school proposes to become a trust school or to expand, what consultation does she propose to carry out with parents at other schools who might be affected by that expansion? What procedures does she intend to put in place to protect those children in schools whose numbers might be falling?

Ruth Kelly: I must disagree with my hon. Friend, even though she raises an interesting point. The freedom that we are granting for schools is to set their own admissions arrangements, within the fair code of admissions, and to manage their own assets and employ their own staff, but to work in collaboration with other schools. That is what divides us from the Conservative party. Our framework has local authorities as the strategic leaders of the system, rather than the system being run directly from Whitehall, with every school fighting for its own survivalthe survival of the fittest. As to what will replace the school organisation committee in the process, local authorities will do so, because that is what they need to perform a fully strategic role, which they have requested.

David Cameron: What automatic additional freedoms will an individual school opting for trust status have compared with a school currently opting for foundation status?

Ruth Kelly: The White Paper sets out to make the freedoms for self-governing foundation schools much more easily available to trust schools. Those trust schools will negotiate with the Department for Education and Skills, using the power to innovate, which is already in the curriculum, to enable them to set the educational model for their school. That might mean greater vocational programmes, linking up with a local employer, or the sort of situation that we see in Knowsley, for instance. Once that is negotiated for one such school, however, it can be quickly applied to all the schools under its trust.

David Cameron: What is interesting about that reply is that the real answer is nonethere are no automatic extra freedoms, and none of them apply to individual schools. If the differences are not significant, is it not hard to believe that this limited trust status will prove that popular? Will the Secretary of State tell us how she   plans to measure progress? In particular, what proportion of schools does she expect to take up trust status by the end of 2007?

Ruth Kelly: I expect that many schools will want to take up trust statusover time, perhaps the majority. Success will be determined, however, by how far trusts are able to raise performance in our school system. The hon. Gentleman is right that this has not just been dreamed up in the Department for Education and Skills; it is already working on the ground, in many parts of the country, to raise standards. For schools that want to go down that route, we want to make it as easily available as possible. That is the idea behind a trust school; it is about bringing in expert governance, linking to an   external provider, enabling collaboration within a system in which such schools have freedom to manage their own assets and employ their own staff, and driving improvement throughout the systemunlike the old grant-maintained system in which schools were bribed to opt out of the system, to define themselves against other schools in the system and to opt for academic selection.

Adult Learning

Kelvin Hopkins: If she will make a statement on funding for adult learning in (a) 200607 and (b) 200708.

Bill Rammell: The Government are broadly maintaining overall public spending to support adult learning, on average, until 200708, but we are shifting priorities in line with the national skills strategy to provide more longer and expensive courses to equip adults for employability. Less public funding will be   available for   leisure and recreation, so adults in non-priority areas will need to pay more, but at an average hourly cost of 1.94 by 2008, I think that is still a very good deal.

Kelvin Hopkins: Last Friday the Learning and Skills Council announced that there would be 230,000 fewer adults in education by 200708. Surely that contradicts our commitment to lifelong learning. Will the Minister look again, seriously, at funding for adult education?

Bill Rammell: That figure relates to publicly funded adult education. Part of the strategy means that if adults   value the provision, we must ask them to pay a little more. Faced with a choice between supporting adult skills for the purpose of employability and to drive up productivity, and supporting adult leisure and recreation, I am convinced of which is the higher priority and where the money should go.

Stephen O'Brien: Notwithstanding the Minister's desperate spin, just six   days ago he announced swingeing cuts in the Learning and Skills Council's funding of shorter adult   education courses. Where is the freedom for further education colleges when they are forced to remove half a million placeshalf a million people's chances to learn skills that, in today's world, the country desperately needs in order to meet the demands of local businesses? Is the Minister proud of the fact that he is scrapping courses leading to, for instance, a certificate in care skills, a foundation certificate in meat and poultry hygiene, a Red Cross qualification in preparing for an emergency, the award in providing a healthier school meals service, or the St. John's Ambulance lifesaver for babies and children?

Bill Rammell: There is no reason why our funding announcement should mean that those courses will go, but I will take no lectures from the Conservative party about further education funding. In the past eight years,   the Government have increased the funding by 48 per cent. in real terms. Let us compare and contrast that with the 15 per cent. real-terms cut that the Conservatives delivered during their last five years in power.
	The key question for the Conservatives is this. If they   disagree with our strategy, what would they do? In   the absence of a willingness to spend more public money, if they do not agree with our priorities, what would they cut in order to fund theirs? Funding for 16   to 18-year-olds, the roll-out of the national employer training programme, or funding for adult basic skills?[Interruption.]

Mr. Speaker: Order. The Minister is answering the questions today.

Michael Foster: My hon. Friend will know that adult learning courses are provided at Worcester sixth-form college and Worcester college of technology, both of which are in my constituency and both of which are excellent institutions. There is, however, no post-16 provision in local secondary schools, although that does not apply elsewhere in Worcestershire. My constituents are at the wrong end of a 13 per cent. funding gap. When will it be closed?

Graham Stuart: When there is a Tory Government.

Bill Rammell: When there is a Tory Governmentthe Government who cut further education funding by 15 per cent. during their last five years in power.
	I know that my hon. Friend the Member for Worcester (Mr. Foster) is particularly concerned about the issue that he has raised. I shall be meeting him shortly to discuss that and other issues. We have taken action to reduce the funding gap between further education and schools without putting schools at a disadvantage, and over the summer my right hon. Friend the Minister for Schools gave a commitment that we would try to tackle the funding anomalies between sixth forms and further education. We hope to make an announcement in the coming weeks.

City Academies

Simon Hughes: What recent discussions she has had with the Chancellor of the Exchequer on the effect of value added tax on city academies.

Jacqui Smith: My officials have had a number of discussions with Her Majesty's Treasury and Her Majesty's Revenue and Customs officials about VAT and academies. We are also having discussions with academies about the issue.

Simon Hughes: What we want is an answer. The Minister will know that when the Prime Minister attended the opening of the new buildings of the City of London academy in Bermondsey on 12 September, he gave a paean of praise to city academies, including these words:
	it is bringing new hope and breathing new life into the local community.
	If that city academy must now find an extra 3.5 million so that it can open its doors to after-school, weekend and community activitiesand the director of education for Southwark has made it clear that it will not be possible to deliver the programme that was intendedwill Departments get their act together, sort out the problem and prevent that threat, involving millions of pounds, from hanging over not just our city academy but every other city academy in the country?

Jacqui Smith: I share the hon. Gentleman's concerns, but we need to be clear that the specific issue under discussion does not prevent academies from providing community use of their facilities. It does limit their ability to charge for such use, which is an important issue that we are absolutely determined to sort out. That is why, for example, my officials are already working with the academy in the hon. Gentleman's constituency to consider ways of managing the situation and the practicalities of academies reclaiming VAT and accounting for output tax over the economic lifetime of the building. But I share his concern and I want to ensure that we sort this matter out. We are committed to doing so because we are committed to ensuring that academies play that role at the heart of their communities.

Jim Cousins: May I raise with my right hon. Friend another problem? These VAT rules mean that there is a strong bias in   favour of new construction, rather than the improvement and conversion of existing buildings. That is why Newcastle's Liberal Democrats, when they asked the Government for a city academy, decided to close a perfectly good large school in my constituency with the   largest ethnic minority student intake in the city. Does she recognise that precisely this difficulty will apply to foundation schools and to future trust schools?

Jacqui Smith: I do not accept my hon. Friend's final   point. There is a specific factor relating to the independence of academies that leads to the particular VAT issue that we are considering. I do not know the details of the school to which my hon. Friend refers, but we should remember that such things are happening in Newcastle and other authorities in the context of considerable extra investment not only through academies, but through the building schools for the future programme, which will increasingly lead to new build and much higher quality school buildingsincluding across our entire secondary estateover the next 15 years. But where there are specific, small, technical but nevertheless important issues that prevent us from achieving modernisation and community use of such facilities, we will of course work across government to sort out the situation.

Looked-after Children

Diana Johnson: What steps she is taking to tackle academic under-achievement by children in care.

Maria Eagle: Improving the educational achievement of looked-after children is a key priority for this Government. Thanks to the significant sums that we have invested, especially through the quality protects and choice protects programmes, we are making some progress. We are building on this in a number of waysfor example, via the duty on local authorities to promote the educational achievement of looked-after children that we introduced earlier this year.

Diana Johnson: I thank my hon. Friend for her reply. As a former chair of social services, I know from first-hand experience that a high priority has been given to looked-after childrena development that started under my right hon. Friend the Member for Holborn and St.   Pancras (Frank Dobson). I draw my hon. Friend's attention to the large number of young people and children who are on the at-risk register. What steps can she take to encourage that group to do their very best in education?

Maria Eagle: I am happy to join my hon. Friend in commending my right hon. Friend the Member for Holborn and St. Pancras (Frank Dobson), whose intervention in this matter as Secretary of State for Health in 1998 is still remembered very well by those responsible for looked-after children. However, we still have to do more. My hon. Friend referred to children on   the at-risk register, not all of whom would be looked-after children. There is no doubt that such very vulnerable children can face far more obstacles in ensuring that they progress as well as other children during their school years. The increasing emphasis that   we are placing on targeted and personalised supportnot only for the gifted and talented, but for the vulnerableshould ensure that such children get the proper support that they need when they need it, in order to overcome the extra obstacles that they face.

John Bercow: Given that children who languish either in institutional care or, indeed, in serial fostering arrangements face particular challenges, anything that the Government can do on that front to improve their prospects will be warmly welcomed on both sides of the House. May I ask the Minister in particular what is being done to ensure that there are plenty of opportunities for such children, first, for reading, and secondly, for adequate and monitored homework?

Maria Eagle: The hon. Gentleman raises some important points about stability of placement. One of the real difficulties that some looked-after children have in doing as well as they should at school and reaching their potential is that they are frequently movedwhether it be from foster placement to foster placement or from school to school. That often presents difficulties, making it more likely that such children miss more chunks of their schooling than others. We need to do more and we have a target to try to ensure greater stability in placement, which the Department is currently striving hard to reach. The further effort that we are going to put into targeted and personalised supportidentifying the needs of these children through the children's trust arrangements, which will ensure that every child has more support at an earlier stagewill be an important step forward and help to ensure that these children are not left behind, languishing at the bottom of the pile, as too many of them currently do.

Roberta Blackman-Woods: Will my hon. Friend join me in congratulating Collingwood college of Durham university in my constituency on its excellent mentoring scheme, whereby university students mentor looked-after children in the area, help them with their studies and, most importantly, raise their educational aspirations? Will she look into ways of fully recognising and expanding that scheme?

Maria Eagle: I would be happy to pass on my congratulations to the college and institution that my   hon. Friend mentions and to the people who are doing that work. I am looking into seeing what further proposals we can make to improve the opportunities for support and extra help that looked-after children receive, and I am convinced that improving the reality of   corporate parenting and improving the reality of mentoring, support and high aspiration for each individual child who is looked after has to be a way forward. We need a pushy parent for every one of these children and I am looking into ways of carrying that forward.

Tim Loughton: One of the great unsung scandals of the education system is the achievement of looked-after children across all the qualification ranges. She quite rightly mentioned the problem of multiple foster placements. If   a child is moved from one end of an authority to the   other, the continuity and stability goes and, unsurprisingly, the educational achievement lapses. Does the Minister agree with our proposals for authorities to have a cap on the number of foster placements that can be made in a year for a particular child, other than in exceptional circumstances? That would help to give them stability at the same education provider.

Maria Eagle: We are pursuing that aimI agree that it is importantto improve the stability of the lives of looked-after children so that they do not have multiple placements. The hon. Gentleman referred to a cap, but it   is hard to impose a cap because of[Interruption.] The problem is that individual circumstances make it difficult. Our target will, however, focus the minds of local authoritiesit is already doing soon increasing stability. That involves fewer placements for individual children, but there may be circumstances in which it is right for a child to move from one placement to another. That mitigates against the use of something as inflexible as a cap, but there is no disagreement between what the   hon. Gentleman said and what we think about the importance of stability in the lives of these children.

Sure Start

Clive Betts: What plans she has to extend the Sure Start programme.

Beverley Hughes: The Government intend to develop 3,500 Sure Start children's centresone for every communityby   2010. There are currently about 400 designated children's centres, most developed from existing provision such as Sure Start local programmes and early excellence centres. About 435 million has been made available to local authorities in 200406 to develop centres in disadvantaged areas. From March next year, 947 million will be available for local authorities to create 2,500 children's centres by March 2008.

Clive Betts: I thank my hon. Friend for that very welcome answer. I visited the Tinsley Sure Start scheme in my constituency recently, and hope to visit many similar schemes in the future. What impressed me most was the way that health and education professionals worked together to deliver a combined and integrated service for parents and children, some of whom are the most needy in our communities. Will she give an assurance that that close working relationship between health and education professionals will be maintained when the Sure Start scheme is mainstreamed to local authorities?

Beverley Hughes: As my hon. Friend rightly says, that is imperative. Indeed, the concept behind Sure Start and the children's centres was that there should be complete integration of services for young children at the point of delivery. Integrated services mean that parents do not have to go knocking on a number of doors. We know that that integration makes a real difference to children's well being in the early years and to their achievements later on.
	It is imperative that the health services are involved. On my visits to children's centres, I have been very encouraged to see the presence of the health services, which even manage some centres. I welcome that, and would like the practice to be more widespread.

Curriculum Guidance

Mark Harper: When she last discussed curriculum guidance with the examination boards.

Jacqui Smith: Neither my right hon. Friend the Secretary of State nor I have discussed curriculum guidance with the awarding bodies.

Mark Harper: Has the Minister read the poem Nothing's Changed by Tatamkhulu Africa? It appears on the GCSE English literature syllabus and it   advocates the bombing of a restaurant to advance social change. Does she think that teachers who teach the poem should be jailed under the proposed Terrorism Bill?

Jacqui Smith: I know that the increasingly numerous and highly professional English teachers in our schools will use the poem to inculcate in our young people precisely those attitudes to literature and terrorism of which all hon. Members would approve.

SOLICITOR-GENERAL

The Solicitor-General was asked

Case Progress

Doug Naysmith: How prosecutors ensure that victims are kept informed about the progress of a case.

Mike O'Brien: The prosecutor's pledge announced by the Attorney-General on 21 October reinforces the Government's commitment to victims. Under it, prosecutors commit themselves to improved contact with victims about the progress of a case. Also, the No Witness, No Justice programme, a joint initiative with the police, ensures that victims are kept informed about a case through local witness care units.

Doug Naysmith: I thank my hon. and learned Friend for   that interesting reply. Does he believe that the prosecution can prevent publication and inappropriate reporting about victims in the media?

Mike O'Brien: For vulnerable witnesses, it is possible for the prosecution to make an application under section 46 of the Youth Justice and Criminal Evidence Act 1999. Such witnesses may be eligible for   reporting restrictions, but the court must be satisfied that the quality of their evidence or their level of co-operation are likely to be diminished by fear or distress at being identified by members of the public.
	In addition, there are obvious obligations in respect of the application of the sub judice rules, which ensure that media reporting of particular cases is restricted. However, those rules apply only while a case is in progress.

Nigel Dodds: Sometimes a difficulty arises with the manner in which victims are informed about the progress of a case. In one instance in my constituency, the police caused great distress when they called at the home of a victim's family, who would have been happier if the information had been conveyed in a more sensitive way. Does the hon. and learned Gentleman agree that it might be worth looking at how such information is sometimes conveyed?

Mike O'Brien: Certainly, how information is conveyed to people is important. For instance, a crime victim who is asked to give evidence in court can be distressed if the police visit is conducted insensitively. Obviously, police officers try to do their best, but they are human and therefore imperfect, and matters are not always handled properly. Increasingly, we are trying to get the CPS to take on much of that role, and we hope that it can be done in a way that enables the witness to have contact with witness care units, which provide not only that initial contact is made more sensitively but also   that if a witness is nervous about having to give evidence, they have the opportunity to visit the court for a familiarisation tour. They can also be provided with help with child care, transport and other facilities to ensure that they are able to give their evidence, which is always a difficult thing to do, with the least possible trauma.

Brian Jenkins: Will my hon. and learned Friend inform the House what special provision is given in the area where more victims withdraw before going to court than any other and where there is more intimidation and distressdomestic violence?

Mike O'Brien: My hon. Friend is right; domestic violence accounts for 16 per cent. of violent crime and involves 13 million women victims and 3 million male victims each year. It is a serious matter.   The CPS has launched a major drive against domestic violence and there is now a national network of co-ordinators who work with various agencies to support the victims of domestic violence. Specialist courts, piloted in Caerphilly and Croydon, have shown that pulling together the various agencies to provide support for victims can improve conviction rates, as victims do not so often withdraw their evidence. In one of those courts, for example, there has been a dramatic fall in the number of retractions of victims' statements, from 53 per cent. to 17 per cent., as a result of such   support to victims of domestic violence. The Government aim to create 25 specialist domestic violence courts and we have invested 1 million to do so.

Dominic Grieve: The Solicitor-General has confirmed that hitherto the main point of contact between a victim and authority on the   progress of a case has been the police, and there are   numerous examples of the breakdown of communication. He says that we shall move towards a new system in which the CPS will take the lead. Could he amplify that point? When will the crown prosecutor's office be the contact point for a victim rather than the police station, if that is the intention? How will that programme of change be rolled out?

Mike O'Brien: From the point of charge up   to   appeal, the aim is to achieve better direct communication between the victim and the CPS. The police will still have much contact, especially with witnesses and victims, so both the police and the CPS will be engaged in the process. Previously, as the hon. Gentleman says, it was primarily the responsibility of the police to make and maintain those contacts and to issue warnings, but as a result of the prosecutor's pledge and the way in which the CPS has developed in recent years, the CPS is taking on much more of that role. As it is the focal point of the prosecution case during court proceedings it offers a far better contact, rather than the prosecutor having to ring the police station each time they know something and hoping that the police officer will be able to inform the victim. Direct communication, which is being rolled out across the country and to which the prosecutor's pledge will give real impetus, will lead to victims receiving a much better service in the criminal justice system.

Simon Hughes: The Solicitor-General will know that many victims, like other witnesses, are told that, for their personal safety they need to move from their home or move their business during a case. Many people affected say that such protection is still unsatisfactory; they cannot happily live their lives somewhere else while the case is going on and certainly cannot carry on a business, so will he and his colleagues from other Departments look into the issue?

Mike O'Brien: The hon. Gentleman speaks from personal knowledge, given the courage that he displayed in giving evidence in a particular case. He is right that some witnesses fear intimidation and, sadly, some have good cause to do so because of the nature of the criminals about whom they are giving evidence. The aim of the police and the Crown Prosecution Service is to provide the maximum reasonable safeguard and protection. It is always difficult to make the right judgment, particularly when dealing with criminals who are very effective at getting at witnesses. I will talk to the police and the Crown Prosecution Service about ways in which we can continue to strengthen the support that we provide for witnesses. The hon. Gentleman had the courage to give evidence, as do many other witnesses. However, some witnesses withdraw their evidencewe must change that and provide them with greater protection.

Crown Prosecution Service

Keith Vaz: What steps he is taking to ensure that communication between the Crown Prosecution Service and victims of crime is improved.

Mike O'Brien: The Crown Prosecution Service is committed to ensuring that victims are kept informed wherever it is aware of new developments in a case. That can be done either through witness care units or by direct contact with victims. The prosecutor's pledge aims to learn from past mistakes to provide an improved communication with victims.

Keith Vaz: I am glad that the Solicitor-General referred to past mistakes, because he will know the case   of my constituent, Robert Payling, whose son was   murdered in Manchester by someone who was subsequently deported by the immigration and nationality directorate without proper reference to the CPS or the police. That was a complete shambles, as one part of the criminal justice system was unaware of what another part was doing. The CPS did not even inform the family of the victim of the crime. What steps is my hon. and learned Friend taking to ensure that that incompetence is not repeated?

Mike O'Brien: The Yin case has, I hope, taught us a valuable lesson about the need for better contacts between the CPS and the IND. A lack of information led the IND to deport a Chinese national who was on bail pending trial following the death of James Bishop, a pedestrian who was hit by a care driven by Mr. Yin. From 1 August 2005, under the direct access protocol, new information links were set up between the IND and the CPS to improve the exchange of information. At present, however, there is no duty on the IND to inform the police or the CPS about deportations. More work needs to be done on that. I   regret that at present I cannot give my hon. Friend the assurance that the Yin case will never be repeated, but we are working to try to improve information exchange between the organisations.

Crown Prosecution Service (Northamptonshire)

Philip Hollobone: What assessment he has made of the performance of the Crown Prosecution Service in Northamptonshire.

Mike O'Brien: The new Crown prosecutor in   Northamptonshire has been appointed to tackle concern about the performance of the CPS. The area has restructured from four to two units, mirroring the police structure in the county. That will provide the necessary resilience, we hope, to service police charging centres as well, and it has freed prosecutors to service additional courts.

Philip Hollobone: Victims of crime in Kettering and Northamptonshire would like an assurance from the Minister that all cases involving persistent young offenders will be brought to court within the 71-day target set by the Government.

Mike O'Brien: The average time from arrest to sentence for persistent young offenders in the area was reduced from 112 days in April 2005 to 85 days in July 2005, which is a significant shift in a short period of time. The CPS is working closely with the magistrates court to reduce those time scales further by prioritising the listing of young offender cases as soon as they are trial ready. We must make those cases trial ready, which is why the restructuring of the CPS is important, as it will enable it to link up much more effectively with the local police.

Business of the House

Chris Grayling: Thank you, Mr. Speaker. We are back to business as usual this morning. Will the Leader of the House give us the business for next week?

Geoff Hoon: The business for next week will be as follows:
	Monday 31 OctoberSecond Reading of the Terrorism (Northern Ireland) Bill.
	Tuesday 1 NovemberSecond Reading of European Union (Accessions) Bill.
	The House will be asked to approve motions on the House of Commons Commission; Parliamentary Contributory Pension Fund; House of Commons Members' Fund and Public Accounts Commission.
	Wednesday 2 NovemberConsideration in Committee of the Terrorism Bill.
	Thursday 3 NovemberContinuation of Consideration in Committee of the Terrorism Bill.
	Friday 4 NovemberThe House will not be sitting.
	The provisional business for the following week will be:
	Monday 7 NovemberSecond Reading of the Council Tax (New Valuation Lists for England) Bill.
	Tuesday 8 NovemberConsideration in Committee of the Electoral Administration Bill.
	Wednesday 9 NovemberReport Stage of the Terrorism Bill.
	Thursday 10 NovemberThird Reading of the Terrorism Bill.
	Friday 11 NovemberPrivate Members' Bills.

Chris Grayling: Yesterday the Home Office indicated that it was considering a new three strikes and you're out system for supermarkets suspected of selling drinks   to under-age drinkers. You have told Ministers on many occasions, Mr. Speaker, that new policy initiatives should be announced in the House, not through the media. Once again, the first we heard of that announcement was through the media. Why?
	When will a Foreign Office Minister come to the House to brief us about the Government's response to the very worrying comments made about Israel yesterday by the Iranian President? I am sure the Leader of the House shares my great concern about what was said.
	Following yesterday's revelations from the Secretary of State for Work and Pensions, may we have an urgent statement from a Minister in that Department? In particular, the House needs more details about the discussions that have taken place with DNA Bioscience about possible future work with the Child Support Agency. May we also be told what steps are being taken to ensure that no conflict of interest can possibly arise over the substantial shareholding in the company held   by the Secretary of State's family, which may increase substantially in value if the company succeeds in winning business from the CSA?
	Given the difficulties that both the Secretary of State and the Prime Minister's wife are experiencing, may we also have an urgent statement from the Prime Minister about the proposal to create a referee for the ministerial code? Had such a person been in post, the current embarrassment over these difficulties might have been avoided. The Leader of the House will be aware that the Committee on Standards in Public Life made such a recommendation to the Government, which the Prime Minister initially accepted, but nothing has happened since then. In the summer the Committee strongly criticised the Government's failure to act. Will the Government please explain that failure to the House?
	Finally, there have been reports this week of turmoil in the Cabinetin particular the suggestion that the Secretary of State for Health and the Secretary of State for Culture, Media and Sport squared up to each other in the battle over smoking in public places. Would it be sensible for the Leader of the House to ask the Administration Committee to investigate whether Ministers in such a position should be offered anger management counselling to ensure that the strong emotions that clearly exist in the Cabinet do not lead to someone getting hurt?

Geoff Hoon: The hon. Gentleman previously had a distinguished career in the media. I would not seek to advise him about the things that he chooses to believe or not to believe, but his previous career has probably given him a predisposition towards believing what he reads in the newspapers. I caution him against that. I   realise that his training may have prepared him to do that

John Bercow: So it is true, then!

Geoff Hoon: I am simply giving the gentlest advice to   the hon. Member for Epsom and Ewell (Chris Grayling).
	On supermarkets, I would not judge that that was a policy initiative. I hope that all hon. Members would recognise that it is a matter of enforcing the existing law. The convention, to which Ministers adhere, has always been that new policy announcements should be made on the Floor of the House. We are simply ensuring that the law, which has existed for a long time, is properly enforced. I hope the hon. Gentleman and other hon. Members will join me in welcoming that.
	On Iran, that is a very disturbing development. I want the House to know that my right hon. Friend the Foreign Secretary has instructed that the Iranian charg-d'affaires be summoned to the Foreign Office, where he will be told in no uncertain terms of the displeasure that the Government feel about those statements. I have seen some details of the speech, which I thought was thoroughly sickening. Not only this country, but other countries will be protesting about it.
	I assure the House that it is my understanding that my right hon. Friend the Secretary of State for Work and Pensions has satisfied all the relevant rules relating to his position and that of his family. The hon. Gentleman raised the question of the Prime Minister's wife. I am sorry he did that. He received a letter earlier this year from the Minister without Portfolio, my right hon. Friend the Member for Makerfield (Mr. McCartney), who speaks on behalf of the Cabinet Office. Nothing new has occurred since then. There is no change in the position from what was set out in that letter.
	In my opening remarks I dealt sufficiently with the hon. Gentleman's final point.

David Heath: May   we have a debate on the prospects for this winter?   Several hon. Members have mentioned possible problems with energy supply, so may I approach the matter from a slightly different position? If predictions of a severe winter are correct, many elderly people will   be at risk. We know that when the average winter   temperature last fell below 4 C, in 1995, 40,000 pensioners, sadly, lost their lives. Any money that goes to pensioners is always welcome, but 10 times more is spent on winter fuel payments than on the fuel poverty insulation scheme. We know that a third of pensioner households still lack adequate heating or insulation, so would it not be better to invest a little more in making pensioners' houses warmer not just this year, but every year?
	May we have a debate on the tax credit system? The Paymaster General appears to be startlingly ignorant about what is going on in her Department. She appeared before the Treasury Sub-Committee yesterday, and when she was asked by my hon. Friend the Member for Solihull (Lorely Burt) about the ombudsman's finding of systemic maladministration, she said:
	I don't know what she means.
	Every other hon. Member knows what the ombudsman means because of the people who come to our surgeries, so surely it is time that we had another debate on the subject.
	May we have a debate on conflict resolution? I hear what the Leader of the House says about the point made   by the hon. Member for Epsom and Ewell (Chris   Grayling), but it seems that some decisions in Cabinet take an unconscionably long time to sort out. I   am sure that we could find better ways of resolving disputes so that the House can get on with its business.

Geoff Hoon: I anticipate that the question of energy supplies will be important. I made it clear yesterday in   a   different capacityI suspect that is the right expressionthat the Government keep the matter closely in mind. We have planned and prepared. I do not know whether this is the hon. Gentleman's intention, but it would not be especially helpful to debate the   prospects for the weather this winter. I assure him,   however, as I assure the House, that we have appropriate contingency measures in hand.
	May I draw the hon. Gentleman's attention to an observation made by Matthew Farrow, the CBI's head of environment policy? He said as recently as 20 October:
	We don't see any situation in which households will be affected or even small businesses.
	It is clear that even the CBI, representing British business, realises that we have the matter properly in hand. We must take weather warnings seriously, but we must not talk up a crisis unnecessarily. I emphasise the fact that we have the matter fully in hand.
	I accept that all right hon. and hon. Members regularly receive representations about problems with the tax credits system, but I suspect that my right hon. Friend the Paymaster General was making it clear that the problem was not systemicthat is my experience, at any rate. There are a number of cases in which problems arisegenerally, in my experience, as a result of significant changes to the circumstances of the people involved. Computer systems must be able to keep track of those changes and respond to them promptly, and I   know that the matter is being addressed in the Treasury.
	On decisions in Cabinet, I do not know whether the hon. Gentleman is offering his assistance to resolve these very difficult questionsI think that he will have to wait some time yet.

David Chaytor: My right hon. Friend will be aware of the considerable interest, especially among Labour Members, in many of the provisions in the new education White Paper. He will also be aware of Labour Members' great enthusiasm for the White Paper's prominence to the concept of fair admissions. Does he accept, however, that the concept requires further clarification, especially regarding the role of selection by ability and by interviewing children? Will he find time for a debate on the concept of fair admissions so that we can clarify the matter in the near future?

Geoff Hoon: My hon. Friend is right to address this vital part of the White Paper. It is clear from my reading of the White Paper that it is permissive, in the sense that it does not provide a prescription for every part of the country. It allows parents much more say in the way in which their local school is managed and operated and in the various principles upon which it operates.
	My right hon. Friend the Secretary of State for Education and Skills is describing a way of raising standards across the country but not necessarily saying that every structure for every part of the country will be identical. That is important because there are clear differences in the way in which children attend schools in London compared with other parts of the country. It is right that we find a way of ensuring higher standards that is consistent with what my hon. Friend says about fair funding and fair admissions.

Nicholas Winterton: The Leader of the House will be aware of the ongoing interest in the operation of the sub judice rule, not least in the light of the tragic events in London in July. No doubt the right hon. Gentleman will be aware that the   right hon. Member for Southampton, Itchen (Mr.   Denham), who chairs the Home Affairs Committee, has requested that the Procedure Committee look again at the sub judice rule.
	The Procedure Committee produced an excellent report on the sub judice rule in the previous Parliament. Will the Leader of the House please arrange for an early debate on it so that the Procedure Committee, in the light of the Government's response, can further consider the sub judice rule?

Geoff Hoon: I am sure that that excellent report was the   result of the excellent chairmanship of the Procedure Committee at the time. I hope that the hon. Gentleman is not in any way casting doubt on the quality of that report in his suggestion about the need for further consideration. This is an important subject and I   recognise that it is one that concerns right hon. and hon. Members. However, it is one that has to be approached with a degree of sensitivity. We cannot have unbridled commentary on current court cases. If that were to happen, judges and potential jurors would be placed in some difficulty. There has to be a balance. I   thought that the previous report was a very good one. If there is serious concern that it did not go sufficiently far in addressing problems raised by Members, that is something that we should look at again.

Lindsay Hoyle: Will my right hon. Friend allow a debate on early-day motion 880 on the construction company, AMEC?
	 [That this House condemns the decision taken by AMEC to close its Adlington site; recognises that the company was established in Adlington by Leonard Fairclough 120 years ago and its subsequent success has been based on the loyal and highly skilled workforce in Adlington; expresses surprise at the decision given that brand new office facilities have only recently been built at Adlington only to find that in a short period of time they are abandoning the site; and calls on the management to repay this loyalty, review this decision and maintain their site in Adlington, helping to support the local economy.]
	AMEC has been based in the village of Adlington in the Chorley constituency for 120 years. The different generations of families who have worked for the company made it very profitable. Indeed, it is one of the   largest construction service companies in the world. We found out yesterday that it is willing to close its base in Adlington, where more than 200 jobs are based. That is the way in which the company is responding to the loyalty of the work force. There is no compassion in the   company. It is only right to have a debate on the company, and on the chairman in particular.

Geoff Hoon: My hon. Friend is right to raise an important issue for his constituency. I well understand why he makes the point. It is important that companies fully recognise the effect of their decisions on communities. My hon. Friend has made his point extremely effectively.

George Young: May we have an early statement from the Secretary of State for Health to explain the shambles surrounding the Government's policy on smoking? We have seen a breakdown of collective Cabinet responsibility and of the normal confidentiality that surrounds Cabinet discussions. Do we not need a statement so that it can be explained why a Scottish Labour Memberthe Secretary of State for Defence, whose constituents will benefit from a totally smoke-free environment in public placeshas used his influence to impose on my constituents a less healthy option?

Geoff Hoon: This is a difficult issue. No one is pretending that these issues cannot be resolved sensibly. The issue is one of balancing the freedom of individuals not to suffer unwarranted exposure to cigarette smoke against the interests of not turning those people who want to smoke into pariahs in our society. That was put extremely well by the shadow Leader of the House when he made that observation, and it indicates that all political parties have their debates on this question. I   should have thought that the right hon. Member for North-West Hampshire (Sir George Young) would welcome the fact that there was such public discussion of these issues.
	I regularly receive complaints that, in fact, such issues are decided behind locked doors and that there is no possibility of having that kind of public discussion. Indeed, I congratulate the Conservative party on the various approaches it takes to the issue. In Wales, the Conservative health spokesman supported the ban on smoking in public places; in Scotland, the Conservative health spokesman opposed the ban. However, those positions are models of clarity compared with that of the   shadow Health Secretary, who said in a speech last month that the Conservatives would replace the Government's plans
	either with the provision for a self-regulated approach, or a full statutory ban on smoking in public places.
	So it appears that, in this country, the Conservative party's official position is both for and against a ban.

David Winnick: Does my   right hon. Friend recall the feeling in the House on   7 July, when the mass murders took place? May we   have a statement on whether the Criminal Injuries   Compensation Authority will increase the compensation? I hope that the compensation will increase, but it is possible that any such increase will not apply retrospectively to the victims of the mass murderers of 7 July. Does my right hon. Friend recognise the point, which some hon. Members have repeatedly raised in the House, that it is only right that those who have suffered the most terrible injuriesthe loss of one or both legs, arms and so onshould be properly compensated? They should be able to live the rest of their lives with every form of medical and financial support so that they can have a life after what occurred. I hope that such a statement will be made in the very near future. There is great concern on this issue.

Geoff Hoon: My hon. Friend has been assiduous in raising this issue and I congratulate him on continuing to do so. He raised it with my right hon. Friend the Prime Minister, who made clear our determination to ensure that early payments are made and to look again at the whole question of criminal compensation cases. My hon. Friend is absolutely right: it is important not only that we provide proper, speedy and effective compensation, particularly to the victims of terrorism such as that which took place on 7 July this year, but to recognise that there are many victims of crime who deserve fair compensation as a result of their injuries.

David Jones: The Leader of the House may be aware of the crisis in NHS dentistry in north Wales. This month, a surgery in Colwyn Bay closed its doors to NHS patients, leaving 7,000 of my constituents without access to an NHS dentist. In the whole county of Conway, there are now no NHS dental surgeries that accept new adult patients. Given that the collapse of the dental service amounts to a serious breach of the Welsh Assembly Government's statutory obligations on health care, will the right hon. Gentleman arrange for the Attorney-General to make a statement to the House on whether proceedings should be instituted against the Assembly, pursuant to schedule   8 of the Government of Wales Act 1998?

Geoff Hoon: Hon. Members raised the issue of dentistry on a number of occasions during business questions in recent weeks, so I conducted some research. The hon. Gentleman will forgive me if I state the obvious: the training of dentists takes a number of years. There appears to have been a significant cut in the training of dentists under the last Conservative Government, who significantly reduced the number of places available, and it has inevitably taken some time to improve the number of dentists, simply because of the length of the   training that is required. About 1,000 new, trained dentists are now available across the country. Obviously, we will continue to expand the number of places to ensure that that provision is available generally in the whole of the United Kingdom.

Denis MacShane: May we have an early debate about setting up a joint committee of the House and the US Congress to investigate very serious allegations against an hon. Member, to whom, of course, I have sent a note informing him that I would raise this matter today? Of course I cannot comment on those allegations. The hon. Member for Bethnal Green and Bow (Mr. Galloway) employs very expensive libel lawyers to stop any press investigation into his role as Lord Haw-Haw for one of the worst tyrants in world history who is responsible for killing more Muslims than anyone else in the history of that great religion. Surely, we need a joint Congress and Commons committee of inquiry to settle the truth once and for all, because if any of the allegations of financial receiptsthe financial trade is vitalin this report are true, not just the hon. Member's reputation but that of the House is at stake if it does not deal with it. I ask my right hon. Friend to contact his opposite number in the US Congress, set up that committee and clear up this matter once and for all.

Geoff Hoon: rose

David Winnick: Where is Galloway?

Mr. Speaker: Order. Remarks like that are not helpful. The right hon. Member for Rotherham (Mr.   MacShane) asked a question that was within order, but the hon. Gentleman is out of order by shouting, Where is Galloway? That is totally out of order.

Geoff Hoon: My right hon. Friend has more than made his point given the content of his question. Obviously, the House should take the matter seriously, but I remind him that we had a brief discussion at the start of business questions about the sub judice rule, and as I understand that the matter is being referred to the appropriate legal authorities in the United States for their consideration I   had best leave his words to speak for themselves.

Philip Dunne: The Chancellor likes to lecture Opposition Members about the economy's productivity and efficiency under his stewardship. Will the Leader of the House please take a lesson from the Chancellor in organising his Department so that he can inform the House of what hours we are likely to sit and over what period two or three months hence?

Geoff Hoon: The hon. Gentleman will be aware that the sitting hours of the House has been a vexed question for a number years and that we are currently operating a compromise arrangement for hours of work. I hope that he would agree that, whatever our personal views of the   present arrangements, we ought to allow that compromise to continue for some time. If he was referring to the wider question of the calendar and sitting dates for Parliament, I assure him that I will put him out of his misery quite soon.

Patrick McFadden: Will the Leader of the House consider making time available for a debate on the contribution of senior citizens to our national life? In particular, will he consider the idea of marking a specific date in the calendar as senior citizens awareness day? A very strong campaign for that is based in Bilston in my constituency, led by the redoubtable campaigner, Tom Larkin. I am sure that that idea would receive wide support from all parties in the House, and I ask him to give serious consideration to it.

Geoff Hoon: I certainly congratulate my hon. Friend's constituent. I have had the privilege of visiting Bilston from time to time and I know just how strong and effective that community is. I also understand from him how effective that community is in supporting its senior citizens. I am sure that the idea can be given serious consideration.

Pete Wishart: Last week, there was a call to hold a debate on trade justice to coincidence with the mass lobby of Parliament on Wednesday next week. Predictably, looking at today's business statement, there is no such space for any such debate. Does the Leader of the House agree that the House should be responsive to our constituents' concerns, especially when they are prepared to come to the House in such vast numbers? Will he do all that he can to persuade the Secretary of State for Trade and Industry to come to the House at least to make a statement on the Government's intentions in that respect?

Geoff Hoon: We are not divided over that issue. The Government strongly support trade justice. Ministers at the Department of Trade and Industry and other Ministers involved in international negotiations have put the case very forcefully. Indeed, it is fair to say that the Government have led the way in arguing, not only in those international discussions but domestically, that it is important that we develop those principles. If the hon. Gentleman were being fair, instead of implying criticism of my right hon. Friend the Secretary of State for Trade and Industry, he would congratulate him.

Huw Irranca-Davies: Will the Leader of the House find time for not only a statement but a full debate in the House on Iran to discuss the implications of the President of Iran's appalling statement recently and the response of the president of the Iranian resistance, who said:
	I again declare that a third option, namely democratic change through the Iranian people and resistance, is the only serious option in dealing with the Mullah's unbridled dictatorship, which is not only the enemy of the Iranian people, but also the enemy of peace, democracy and humanity.
	It is time that we had the opportunity to debate in the   full and in the round on the Floor of the House the potential of those who are committed to democratic change indigenously within the region.

Geoff Hoon: My hon. Friend makes a good point. I   have already indicated to the House the Government's serious concern about the statement made by the new Iranian President. Other aspects of what is happening in Iran at present are causing the Government considerable anxiety. I certainly recognise that this is a matter that the House will want to consider in more detail at a later date.

Julian Lewis: Does the Leader of the House recall from his time as Secretary of   State for Defence the settlement announced in 2000   of claims for the British internees in the far east under the Japanese, and the award of 10,000 for each   of them? Five years later the Government stand condemned by the parliamentary ombudsman for retrospectively excluding about 700 people who suffered in that way. May we have a statement on the Floor of the House from the Minister with responsibility for veterans about the derisory offer of 500 compensation to those people affected, instead of him continuing to shelterit saddens me to say thisbehind what have so far been two written ministerial statements?

Geoff Hoon: The hon. Gentleman has followed these matters with great care, and I heard supporting voices from the Opposition Benches, but I was very proud of what the Government did in providing compensation to far eastern prisoners of war. My father served in the far east and I recognise that that was a particularly brutal and nasty aspect of conflict that affected many people. It is necessary that these decisions are subject to rules, and I assure him that a great deal of thought and care was given to drawing them up. This was a matter not of looking at the cost, but of trying to ensure that the rules were fair. The hon. Gentleman referred to 700 people. I   hope that he will take it from me that drawing in another group will not necessarily solve the problem to which he refers, because by adjusting the rules to take account of a further group, another larger group may well become eligible. These matters have also been subject to litigation. I assure him that my right hon. Friend the Secretary of State for Defence and other relevant Ministers look at these issues with as much compassion and sensitivity as possible. Bearing in mind that no previous Government had taken such a decision, we brought forward the scheme because we felt that the country owed a debt of honour to those people who suffered in that way in the course of the second world war. But it is not possible simply to provide an unlimited scheme. The scheme has to be subject to certain rules, and those rules necessarily unfortunately exclude some people from participation.

Anne Moffat: I, too, would like to ask my right hon. Friend for a debate on fair trade, but I should like to ask for it from a positive perspective, because it could be used to encourage local authorities to become fair trade councils. Local authorities could encourage events such as those that are taking place in my constituency on Saturday, where a house has been turned into a fair trade shop in which Fairtrade goods will be sold, so that the communities are encouraged to buy those products. I congratulate Lesley Wilson, who has championed the cause in my constituency.

Geoff Hoon: I am extremely grateful to my hon. Friend for putting the matter in such a positive way. This is something that the Government take extremely seriously, and I know that it is also taken seriously by a   number of local authorities throughout the country. I   am delighted that her local authority and people in her constituency are promoting the event on Saturday.

Cheryl Gillan: I do not know whether the Leader of the House is aware that some major international decisions on space matters are due shortly, namely on global monitoring for environment and security, Galileo and Aurora, all of   which affect several Departments of State and research councils. In addition, at the European Space Agency's ministerial council in December, important decisions will be made on the level of UK participation in those European flagship programmes. Will the Leader of the House give some serious thought to whether we can have a debate in Government time on   space matters so that we can probe the Government on their intentions for UK participation and highlight some of the first-class science that is being carried out by British firms and research establishments?

Geoff Hoon: I congratulate the hon. Lady on raising these important issues, not least by giving such emphasis to science, which is sometimes neglected in our discussions in the House and in the country, despite the fact that we have some of the world's leading scientists and some of the best research on these questions. I am always intrigued by the range of my responsibilities. I   am delighted that they extend into space, and I shall certainly encourage my colleagues to ensure that the House is kept fully informed of the way in which those particular issues develop in the course of the British presidency.

Clive Betts: Will my right hon. Friend organise an early debate on the future of the special steels industry, which would allow an opportunity for Sheffield Members to raise the worrying announcement this week from Outokumpu, a large steel producer in my constituency, of 700 redundancies? I   want to seek assurances that the Department of Trade and Industry and Yorkshire Forward will use every possible endeavours, first to save what jobs and production capacity we can, secondly to ensure the future of the remaining 800 jobs, and finally to give every assistance to those workers who do lose their jobs to find alternative work and to obtain the necessary retraining.

Geoff Hoon: My hon. Friend is absolutely right to raise that disturbing development. I was aware of that prospective announcement, and it is a matter that I   know will cause grave concern in and around Sheffield, which has such a great heritage, particularly in the special steels industry. I am well aware that the matter will cause great anxiety to families and people in Sheffield, and it is important that they are supported. I   can assure my hon. Friend that my right hon. Friend the Secretary of State for Trade and Industry will provide appropriate support and assistance to those who may be affected by the announcement. The Government certainly take the matter seriously.

Nigel Dodds: May we have an early debate in Government time on the Government's plans for post-primary education in Northern Ireland and the Government's attack on Ulster's fine grammar schools? Such a debate would provide an opportunity for the Government to correct what the Secretary of State for Education and Skills said earlier at Question Time when she said that this had the support of, and had originated in, the Northern Ireland Assembly. That is not the case, because the Assembly did not have the opportunity to vote on the matter, and the people of Northern Ireland have made it clear, through a household survey of the entire Province, that they reject the Government's plans. May we have an early debate so that the Government can be tackled on the issue?

Geoff Hoon: I am slightly disappointed in the approach taken by the hon. Gentleman to education matters in Northern Ireland, not least because my right hon. Friend the Secretary of State for Northern Ireland recently announced a specific fund to help the education and training of young people and students in Northern Ireland, amounting to some 45 million in the next financial year, rising to 55 million thereafter. That demonstrates the determination of my right hon. Friend and the Government to ensure that Northern Ireland benefits from higher standards of education and training across that part of this country.

Mark Durkan: As I take it that the Leader of the House will not afford a debate on education changes in Northern Ireland, will he afford a debate in Government time on the Government's proposals for the review of public administration? We want to debate not just the question of the future shake up of local government, but the implications for the picture of inequality that already exists in Northern Ireland as a result of the distribution of Government jobs, newly created jobs, employment and long-term unemployment, which all show a deep and graphic disparity, as demonstrated on maps produced by the   Equality Commission for Northern Ireland. In the context of such a debate, we will be able to question what the Government are doing with jobs that were previously decentralised to my constituency and that are now under threat, and the implications of the electronic human resources contract being let by the Northern Ireland civil service, which again seems to be going the way of the centralised Belfast approach, and will add to   the phenomenon of inequality that in my part of Northern Ireland is becoming known as the Hain drain.

Geoff Hoon: I am grateful to the hon. Gentleman for setting out his concerns in such detail. I am not sure that I will be able to do justice to the full range of issues that   he raised, but let me restate the determination of my right hon. Friend the Secretary of State for Northern Ireland in the form of funding for several initiatives in Northern Ireland. He is demonstrating that he takes very seriously the issues that the hon. Gentleman raises.
	Let me emphasise to all right hon. and hon. Members the opportunities afforded by Westminster Hall. There   are not always sufficient requests for debates there, and several of the matters that have been raised, including that raised by the hon. Member for Foyle (Mark Durkan), may be suitable subjects for debate in that forum.

John Hayes: The Leader of the House may recall that on 20 July I asked the Prime Minister to look again at the issue of prescription charges for cystic fibrosis sufferers. The Leader of the House will know that those people are affected by an historical anomaly that means that they do not get free prescriptions. Will he arrange for an urgent debate on the plight of vulnerable people? Given,   too, the threat facing Alzheimer's sufferers in respect of drug treatment and the Government's failure adequately to address the issue of the early diagnosis of autism in children, a picture is emergingI am sorry to have to say thisof a heartless Government who are insensitive to the needs of the most vulnerable Britons.

Geoff Hoon: I simply do not accept the hon. Gentleman's charge. The Government have shown themselves to be remarkably sensitive to the importance of allowing the prescription even of drugs that have not yet entirely completed the licensing process, to use a   recent illustration, because of widespread public concern and the need to ensure that effective drugs are brought into use as soon as possible. I am in no way diminishing the importance of the issues that the hon. Gentleman raises, but they would be a suitable subject for debate in Westminster Hall, which gives right hon. and hon. Members an opportunity to debate such important matters.

Martin Linton: Will my right hon. Friend arrange for the Transport Secretary to come to the House to make a statement on navigational standards on the Thames? If he is a driver, my right hon. Friend will know that Battersea bridge is closed to motorists as a result of the 10th strike in 10 years, yet   it remains perfectly legal to drive a barge in the Port of London without any training and without a licence. Apart from the current incident, which is still being investigated, all those bridge strikes have involved misjudgement or miscalculation by the person navigating the barge.

Geoff Hoon: I know that that is a very important issue not only for my hon. Friend's constituents but for Londoners generally. He is right to draw attention to the question of training and skills for those who driveI am not sure that drive is the right wordbarges. It appears that the new boat master's licence for inland waterways, which will become law during 2006, will extend competency requirements to freight-carrying vessels in categorised waters. It is obviously an important issue that needs addressing.

Brian Binley: Does the Leader of the House ascribe the recent discord in the Cabinet on smoking to the fact that we have a fag-end Prime Minister? Will he call on the Prime Minister to set an early resignation date so that cohesion and some form of leadership can be restored?

Mr. Speaker: Order. That is certainly not the business of the House.

Geoff Hoon: The answer to the question is no.

Dari Taylor: May I press the case for an early statement on the Government's position on smoking in public places? The figures are well known and very alarming. Passive smoking kills 30 people every day and kills two employed people every working day. The figures are very alarming and we should acknowledge them. We are told in the press that the Government believe that a partial ban is feasible and a total ban is not easily policed. Those arguments should be expressed on the Floor of the House so that all hon. Members have the opportunity to hear them and, frankly, to dispute them.

Geoff Hoon: I have already made it clear that these are difficult issues that require a balance to be struck. When making such judgments, it is always the case that the place where the line is drawn will provoke different reactions from different parts of the community. It is therefore the Government's job, after proper and serious debate, to reach a conclusion. That conclusion has been reached. I remind my hon. Friend, in the politest way possible, that the judgment has been reached on the basis of the manifesto on which she and I were elected and that we argued before the country as a reason for voting for us. It is therefore a proper basis on which to proceed.

Andrew MacKay: The Leader of the House will be aware that this week in the House of Lords the Racial and Religious Hatred Bill was amended in a very major sense by a large majority with all-party support. May I have an assurance that that amendment will be accepted when the Bill returns to the Commons? If not, may we have a guarantee of extra time to debate the amendment, which has a clear majority in the country and should have a clear majority in this House as well?

Geoff Hoon: The Government were obviously extremely disappointed by the vote in the House of   Lords. It is important that the majority view of the   House of Commons should prevail, although I   recognise that in such matters it is equally important that there should be   a degree of consensus. My right hon. Friend the Home Secretary will be looking to achieve a consensus on the basis, we hope, of agreement in the House of Lords; otherwise, we will have to look at the matter afresh.

Martin Salter: The Leader of   the House will be aware of the Home Office's intention to outlaw the possession of violent internet pornography, as demanded by Liz Longhurst, the campaigning mother from Reading whose daughter was brutally murdered by a man obsessed with internet images of rape, torture and necrophilia, and who was recently awarded the Pride of Reading prize for her inspiring work. Can the Leader of the House tell us when these matters will be brought before Parliament?

Geoff Hoon: I congratulate my hon. Friend's constituent. I have seen reference to her campaign in the media. I recognise that this is an important subject and one that all parents are concerned about, and I hope that she continues and is successful.

Nadine Dorries: Will the Leader of the House consider making time for an urgent and full debate on the education White Paper, which was brought to the House with a statement this week? I ask because there is obvious confusion and great unhappiness among Members on both sides of the   House, and such a debate would give us all the opportunity to air our concerns fully.

Geoff Hoon: Given that we have already had this week a very long and detailed statement together with a very long and detailed opportunity for right hon. and hon. Members to question my right hon. Friend the Secretary of State for Education and Skills, I am surprised that hon. Members are complaining within a matter of 48 hours. I suggest some detailed reading of the White Paper, as an opportunity for further debate and discussion will undoubtedly arise at some stage in the future.

Points of Order

David Heath: On a point of order, Mr. Speaker. During business questions, the Leader of the House, in responsea very careful responseto the right hon. Member for Rotherham (Mr. MacShane), gave what I think was an inadvertent impression that the sub judice rules apply to cases that may or may not be brought before jurisdictions other than our own. Can you confirm that that is not the case and that we are free to comment on cases that are before foreign courts?

Mr. Speaker: It does apply to the UK jurisdiction. I   urge the House to be very careful when any attack is made on an hon. Member. We know the conventions of the House when we are dealing with these matters.

John Bercow: On a point of order, Mr. Speaker. In the light of the growing scandal of the arbitrary and unsafe removal of failed asylum seekers to Zimbabwe, Somalia and Sudan, to name but   three countries where returnees are at risk of imprisonment, torture, death or a grisly combination of   all three, have you received any indication from a member of the Government that Ministers intend to make a statement about the systems that they will put in place and the painstaking efforts they will make to ensure that individuals are not returned to countries whose Governments cannot or will not guarantee their safety?

Mr. Speaker: I think that perhaps the hon. Gentleman is asking a failed business question. It is not a matter for the Chair.

BILL PRESENTED

Health

Ms Secretary Hewitt presented a Bill to make provision for the prohibition of smoking in certain premises, places and vehicles; to make provision in relation to the prevention and control of health care associated infections; to make provision in relation to the management and use of controlled drugs; to make provision in relation to the supervision of certain dealings with medicinal products and the running of pharmacy premises, and about orders under the Medicines Act 1968 and orders amending that Act under the Health Act 1999; to make further provision about the National Health Service in England and Wales and about the recovery of National Health Service costs; to make provision for the establishment and functions of the Appointments Commission; to make further provision about the exercise of social care training functions; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. Explanatory notes to be printed [Bill 69].

Orders of the Day
	  
	National Insurance Contributions Bill

Order for Second Reading read.

Dawn Primarolo: I beg to move, That the Bill be now read a Second time.
	At the time of the pre-Budget report on 2 December 2004, I made a statement to the House that outlined how, despite the best efforts of successive Governments since 1994, we continued to be presented with ever more complex and contrived arrangements designed to avoid income tax and national insurance on the rewards from employment. I made it clear that we intended to close down such activity permanently.
	In my statement, I recalled that earlier attempts at such avoidance took the form of paying bonuses and salaries in gold bullion, diamonds and fine wine. When those routes were closed, employers started to pay bonuses through ever more sophisticated financial instruments and securities to reduce the amount of national insurance that they had to pay, to avoid their obligation to operate pay-as-you-earn and to reduce employees' tax bills.
	The tax avoidance disclosure rules that were introduced in the Finance Act 2004 brought to light manymore than 100examples of such schemes that   had been devised or marketed by promoters. That showed that a significant minority of employers and their advisers were continuing to devise, operate and   market ever more contrived avoidance schemes to disguise what is, in effect, remuneration. Without prompt and decisive action, there was a genuine possibility of tax and national insurance contributions avoidance schemes continuing, to the detriment of the Exchequer and the many employers and employeesthe majoritywho pay their fair share of tax and national insurance.
	I gave notice of our intention to deal with any similar arrangements that emerged in future that were designed to frustrate our intention that employers and employees should pay their fair share of tax and national insurance on the rewards from employment. When we become aware of arrangements that attempt to frustrate that intention, we will introduce legislation to close them down and, when necessary, with effect from 2 December 2004.

Mark Field: Does the Paymaster General accept that one of the problems is the complication of the tax system since 1997? It means that it is inevitably in the interests of employers and some employees that income should not be regarded as such but regarded as capital for lower taxation. How many of the 100 schemes that she mentioned are straightforwardly designed to turn what might be described as income, and therefore in a somewhat grey area, into capital that is thus subject to a capital gains tax levy, which is generated at a lower level?

Dawn Primarolo: The hon. Gentleman may know the   answer from discussions during the proceedings on the Finance Act 2005. However, let me provide a short list of the sort of schemes that have been operating in relation to bonuses that are payment for employment. In 1991, such schemes used unit trusts to shield bonuses and the previous Government closed them down. In 1993, gold bullion and tradeable commodities were used and subsequently closed down. However, the schemes returned in 1994, using diamonds and fine wine. They were closed down but another type of scheme returned again in 1995 with grants of options in third-party companies. In 1996, own-company share awards and options were offered.
	All those schemes reveal a systematic and continued attempt to use contrived schemes for payment for employment, which should come within the PAYE system. The issue is whether tax and national insurance are paid on the relevant forms of income. The Bill tries to provide for that. I hope that, as I go through the   provisions, the hon. Gentleman will be satisfied that   the measure is specifically targeted and that it includes the necessary safeguards to ensure that. I hope that he will agree that the Bill is a proportionate and relevant way to tackle the problem.

Mark Field: The Paymaster General has made a good case for dealing with some contrived schemes that operated for over a decade, but I suspect that the previous Government closed them all down. However, given the complexity of the tax system, which creates an obvious incentive in a grey area to characterise what might have been described as income in the past as capital because of the lower tax rates, how many of the 100 schemes that were being marketed on 2 December 2004 are straightforward rather than the extreme contrivances that we all agree should have been closed down?

Dawn Primarolo: My advice is that they are all contrived schemes of the same convoluted nature as their predecessors. The hon. Gentleman spoke of complexity, and overcoming that has been a frustrating problem for hon. Members, especially those of us who serve on Finance Bill Committees, and for those who   have to implement the legislation. To close down a   complex and sophisticated scheme, we need a sophisticated and complex measure. Our measures make a clear and unambiguous statement: do not undertake contrived schemes. They will be closed down   whenever they are identified. Closure could be backdated to the December 2004 statement.

Rob Marris: Am I right that we are not discussing peanuts? Without the Bill, the schemes would cost Her Majesty's Revenue and Customs approximately 240 million. That is not small beer.

Dawn Primarolo: Indeed, it is not an insignificant amount of money and it should have been paid. The vast majority of taxpayers pay, but non-payment has direct effects not only on the tax collected but on the money that goes into the national insurance fund.
	In 2004, I gave notice of our intention to deal with any future arrangements that were designed to frustrate our intention that employers and employees should pay their fair share of tax and national insurance on their rewards for employment. When we become aware of such arrangements, we will introduce legislation to close them down and, I repeat, when necessary, with effect from 2 December 2004.
	If some people think that the Government's resolve has weakened, my statement stands today as strongly as it did on 2 December 2004. We are closely examining what has happened since that date. I want employers and their advisers to be in no doubt. If they continue to avoid their responsibilities, or are thinking of doing so in future, we will not hesitate to introduce further legislation to close down their schemes.
	As a first step towards demonstrating our commitment to taking action, schedule 2 to the Finance (No. 2) Act 2005 was introduced to strengthen the income tax rules dealing with employment-related securities back to 2 December 2004. The Government had already published a draft technical note alongside the pre-Budget report last year, explaining our proposals, followed by draft legislation in February 2005. Interested parties have therefore had an extensive period in which to scrutinise and comment on the detail of the provisions, which were then fully debated during the Committee stage of that Act.
	The Bill before us is the second legislative step that demonstrates our commitment to taking action against avoidance. It is key to achieving the Government's objectives of fairness and opportunity by ensuring that all pay their fair share of tax and national insurance. It is also an essential element in building a serious and credible deterrent against future avoidance.
	As the tax disclosure provisions have demonstrated, and as we and the previous Conservative Government have discovered, it is not always possible to anticipate the range and complexity of those extremely contrived arrangements. The Government intend to close down such avoidance schemes permanently. The Bill will ensure that the Government can deal with any arrangements designed to frustrate their intentions. That will ensure that the tax and national insurance that should rightly be paid on rewards for employment are paid. There is no annual equivalent of the Finance Bill for national insurance, so the Bill provides the necessary powers to apply national insurance to payments from such schemes.
	When the Government become aware of arrangements that attempt to avoid national insurance contributions as well as tax, we will introduce regulations to close them down, where necessary from 2 December 2004. This action will not affect the vast majority of employers and employees, who organise their affairs in a straightforward and transparent way. In particular, genuine employee share schemes and share option plans will not be affected.
	The Bill provides for a power to make regulations inrespect of national insurance that reflect backdated tax   changes that take effect on or after 2 December 2004 and which may be outside the scope of existing national   insurance legislation. The power will allow for national insurance liability to be charged starting from 2 December 2004, if necessary.
	The Bill is needed to extend existing regulation-making powers and to make it possible to impose a national insurance charge on disguised remuneration that is capable of taking effect from 2 December 2004, where necessary. Currently, a national insurance liability can usually be charged only from the date on which the national insurance regulations are made, except in limited circumstances in which the regulations can be backdated to the beginning of the tax year in which the regulations are made. This is in contrast to tax, where liability can, if the legislation so provides, be applied retrospectively to the date of an announcement made before the legislation receives Royal Assent.
	Provisions in the Bill also allow for consequential changes for the purposes of contributions, contributory benefits and statutory payments where appropriate. For instance, a national insurance charge might be levied back to 2 December 2004 to align with the start date of anti-avoidance tax measures. In such a case, the provisions of the Bill, and the regulations made under the powers in the Bill, would ensure that those contributions would count for the purposes of contributory benefit and statutory payments.
	The Bill also provides a power to extend the avoidance arrangement disclosure rules to national insurance that currently apply to income tax. Finally, it provides a power to prevent the use of national insurance contribution elections and agreements over shares and securities that have been targeted by backdated national insurance regulations made under the Bill. This will mean that employers cannot pass on to their employees their own national insurance liabilities that they have tried to avoid.
	Significantly, the Government have ensured that the Bill contains important safeguards to ensure that regulations made under it take full account of human rights considerations. This is in addition to the Government's existing duty to make regulations that are compatible with the European convention on human rights. Furthermore, the power to make regulations altering liability is restricted to reflect, so far as is possible, employment remuneration measures in tax legislationnormally Finance Actsand is intended to be used only to reflect tax anti-avoidance measures. So when such regulations are made, the House will already have had the chance to consider any relevant human rights issues on backdated tax legislation during the passage of the relevant Finance Bill or other legislation.
	The Bill also includes a specific provision to ensure   that when, for instance, as part of a package of anti-avoidance measures there is exceptionally a reduction of national insurance liability for past periods, any existing or future benefit entitlement will not be affected.
	We will publish the draft regulations a minimum of 12 weeks before they are made, so that employers and their representatives will have an opportunity to comment on the technical content of any proposed national insurance changes. Once the Bill has received Royal Assent, any national insurance legislation will have to be laid within 12 months of the corresponding retrospective tax legislation. Furthermore, to ensure that there is adequate parliamentary scrutiny when regulations are made, such regulations will be subject to the affirmative resolution procedure.
	The powers in the Bill will be used, in the first instance, to make regulations to reflect the employment-related securities anti-avoidance provisions included in schedule 2 to the Finance (No. 2) Act 2005, which received Royal Assent in July 2005, but which took effect from 2 December 2004.
	In conclusion, the Bill is important and necessary to   ensure fairness. It will not affect the vast majority of   employers, who do not seek to avoid their tax and   national insurance liabilities through avoidance schemes. However, I have explained how, unfortunately, a small minority continue to try to avoid their obligations, at substantial cost to all other taxpayers. The Bill is therefore an appropriate, proportionate and effective response to national insurance avoidance, and I commend it to the House.

Mark Field: It is self-evident that there are few subjects of debate more likely to empty the Chamber than national insurance contributions.
	In an age in which consecutive Finance Acts create and then abolish new-fangled tax instruments, national insurance contributions have proved remarkably resilient. We are now in the 58th year since their coming into force as part of the welfare state establishment that followed world war two. Back in 1948, all those at work except married women paid the princely weekly sum of 4s 11dthat is 24.5p for all those Members of the House younger than mein a flat-rate compulsory contribution. How times have changed! The only thing that is flat about national insurance today is the spin in which the Government find themselves when trying to raise as much money as possible in their frantic attempt to balance their books. I said in Committee in June during the passage of the Finance Bill in June that,
	for our part, it is difficult to avoid the conclusion that many of the anti-avoidance proposals are driven by an increasingly desperate Treasury desire to fill its revenue black hole without regard to the damaging effect that it will have on the development of start-up ventures, and, indeed, some bona fide remuneration schemes.[Official Report, Standing Committee B, 21 June 2005; c. 43.]
	The Finance (No. 2) Act 2005 made a number of amendments to the Income Tax (Earnings and Pensions) Act 2003, with the aim of closing down schemes to avoid income tax using employment-related securities. Those amendments have retrospective effect, as the Paymaster General rightly pointed out, going back to 2 December 2004. It is not currently possible to extend retrospective income tax provisions to national insurance contributions, because liability for NICs can be charged, as the Paymaster General mentioned, only from the date on which NICs regulations are made, except in limited circumstances in which the regulations can be backdated to the beginning of the tax year.
	The Bill's stated purpose is to align national insurance legislation with income tax legislation, which will allow tax liability to be applied back to the date of the announcement. As the Paymaster General pointed out, the Bill also contains provisions to restrict employers' ability to pass on any secondary NICs liability to employees and extends the existing tax disclosure rules to NICs. I shall come to aspects of that in a moment, if I may.
	There is, however, a good reason for existing NICs legislation not allowing regulations to take such retrospective effect. In my view, only in the rarest of circumstances should the Government contemplate either retroactive or retrospective legislation. I fear that the Bill's effect will be to institutionalise retrospection. We shall certainly need to explore that in far greater detail in Committee.
	The substantive clauses will put in place the intention of the Paymaster General's statement of 2 December 2004. Recognising the difficulty of anticipating the ingenuity and inventiveness of the avoidance industry, she gave notice of the Government's intention to deal with any arrangements that emerge that are
	designed to frustrate our intention that employers and employees should pay the proper amount of tax and NICs on the rewards of employment.
	She continued:
	Where we become aware of arrangements which attempt to frustrate this intention we will introduce legislation to close them down, where necessary from today.
	As we gathered from the previous exchanges, it is clear that there may be 100 such contrivance schemes. We need to understand whether some of those are in many ways bone fide remuneration schemes, and indeed whether their closure might be detrimental to the very start-up operations that I think all of us in the House agree are the lifeblood of the economy.
	The key issue, however, is whether the importance of protecting tax revenues outweighs the need for certainty in commercial forward planning, because the threat of retrospection came as a great surprise to many tax professionals, as it falls foul of one of the great canons of taxationthat of certainty.
	Arguably, retrospection is also unconstitutional, and if not it should be regarded as acceptable only when couched in unambiguous terms. The Government's admirably comprehensive explanatory notes make much of what they regard as the position under the   Human Rights Act 1998. In spite of the characteristically robust protestations of human rights compatibility from the Chancellor of the Exchequer, his is a position of an interested party, for the reasons I have set out. These measures will obviously bring in more moneyperhaps as much as 240 million during this year and years to come.
	The Chancellor and the Treasury need that money to keep flowing in, and it strikes me that several experts in this novel but complex field of human rights take a different view on compatibility. No one disputes that it is the Government's duty and responsibility to devise policy, but equally Parliament must retain effective control over how that policy is implemented by legislation.
	In spite of the Paymaster General's suggestion that this power is relatively limitedthe words of comfort about the affirmative procedure were positiveParliament will undertake only cursory scrutiny, because the Bill is designed to enable Her Majesty's Revenue and Customs to backdate to December 2004 all those NICs to which the Finance (No. 2) Act 2005 changes apply.
	We must consider some of the practical effectmy hon. Friend the Member for West Suffolk (Mr. Spring), the shadow Paymaster General, will mention some such examples laterand remember that NICs come from both the employer and employee. Are the Government seriously suggesting that erstwhile employers of someone who has died after December 2004, or perhaps of a former employee who has been fired in acrimonious circumstances, should have disputed NICs clawed back? This has all the makings of another farce on the linesalthough, I accept, not to the same degreeof the tax credits fiasco. How much contingency has the Paymaster General made for writing off sums that can neither be claimed nor easily traced?
	It gets worse, because by the time the Bill has made it through Parliament, no doubt the new year2006will be upon us. Unravelling NICs arrangements, which by then would already be over a year old, will also most likely have knock-on implications for the disclosed employer company profits in previous tax years. That may have a crucial impact, especially if the tax avoidance in question is considered widespread within a particular industry sector.

Dawn Primarolo: First, does the hon. Gentleman agree that if the legislation's effect is to deter people from even bothering to devise schemes that seek not to pay the tax and national insurance that should have been paidI sincerely hope it isit will have done precisely what it aims to do, and all the things he is talking about, which no doubt we will explore in Committee, will not happen?
	Secondly, does the hon. Gentleman think that the general taxpayer, and the Government representing the   general taxpayer, are also entitled to certainty about revenues? This is employment pay, so it should be subject to pay-as-you-earn and national insurance.

Mark Field: Let me answer the second point first, if I   may. On the certainty issue, in any one year we do not know how many people will be in the employment market, as we have gathered from the constantly changing growth figures that have been published since the autumn review last year. For that reason, there will never be complete certainty for any Government at any time. What we are looking for here is commercial certainty. Surely it is the entitlement of individuals and companies to have that level of certainty. After all, tax is not a voluntary regime; it is imposed by a Government on their people. Such an imposition gives any Government of any day great power. The certainty that is therefore required is commercial certainty for those who could suffer from a tax.
	On the Paymaster General's first point, our concern is the law of unintended consequences. We never quite know how things will unravel. I am not looking necessarily to stand up for those tax advisers and employee benefits remuneration people whose ingenuity allows new schemes to be developed at any one time; but equally, it is not the duty either of an employee or an employer, or of a company, to maximise the tax paid. They are quite entitled, where they can, to find what might be regarded as loopholes. It is obviously the Treasury's job, where there are unintended loopholes, to close those for the future.

Dawn Primarolo: I am grateful to the hon. Gentleman for giving way again. To pick him up on maximising the tax paid, it is the job of the House and the Government to ensure that legislation that the House has passed on tax and national insurance being paid on certain types of income at a certain rate actually happens. That is the issue here, not whether people are entitled to plan for tax. How does the House ensure that the legislation already passed is honoured? That is a fair point.

Mark Field: I am intrigued by the tense the Paymaster General uses. She refers to legislation that the House has passed. Our concern is not with legislation where there is a clear intention from the Government. The issue here is retrospection. That is our great anxiety. Where legislation has been passed, and there is clarity and certainty, that is fine, but the point of the Bill is to sweep back as far as 2 December 2004.

Rob Marris: I am following the hon. Gentleman's remarks closely. First, perhaps he can explain how the retrospection for NICs will be different from that which we already have for tax. Secondly, may I point out to him that not many people on minimum wage in my constituency have been getting paid in platinum sponges or any such device? I would expect most people, if not all, who will be caught by this legislation to have had specialist tax advice, quite possibly through their employer. That specialist tax adviser should have told them that anything after 2 December 2004 is at risk. If the tax adviser failed to do so, he or she is at risk in respect of negligence.

Mark Field: Unfortunately, my constituency contains the City of London, where gold bullion, fine wine and all these contrivance schemes possibly began. It might be different in Wolverhampton. I look forward to visiting the hon. Gentleman's constituency at some pointperhaps in the near future on a ministerial visit, I hope, when Conservative Members are on the other side of the House.[Laughter.] That might take a little time.
	On the hon. Gentleman's serious point, we are concerned about retrospection, particularly in relation to national insurance, because of the potential double whammy for many employers. While one can entirely understand the protection given to employees, which we   will discuss later or in Committee, one of the great   differences between the national insurance contributions regime and the regime under the Finance Act for income tax is that employers run the risk of not only paying their own 12.8 per cent. but their employees' national insurance part. They might be able to go back and sue their tax adviser, but that might not be a practical solution. While we still have grave concerns about retrospection, which were articulated in the Finance Bill Committee, equally we want to articulate those now and consider the other ways in which the legislation applies.
	Let me continue on the path towards the end of this Second Reading. As I mentioned a moment or two ago, the tax avoidance in question might be widespread in particular industry sectors. What would happen if the company concerned has been sold in the meantime, benefiting from what it will eventually become clear are vastly inflated profits?
	The sheer uncertainty and potential for unfairness outweigh the benefits of this innovative attempt to deal with the avoidance problem that the Treasury understandably seeks to tackle. Given the Paymaster General's broad-brush assertion in her statement of 2 December, how can we be sure that the scope of these retrospective powers will only be used sparingly? Ultimately, the crux of the question is: who judges whether something is to be regarded as unacceptable avoidance?
	Most of the Bill's provisions have retrospective effect. The Government are becoming increasingly open about passing such provisions. Previously, such provisions were only described as retroactive, whereas now the word retrospective is openly used in the Bill. While most of the Bill's provisions cannot take effect before 2 December 2004, the effect of sections 5 and 6 is potentially unlimited, as any past agreements and joint elections to transfer secondary liability to national insurance contributions to employees can be disapplied. Under those elections, employees were able to pass the national insurance cost risk to employees without limit as to when the election was entered into.
	The Bill's retrospective effect necessarily causes uncertainty for UK business. Businesses must be able to plan their activities and cost base in a stable framework. That will be difficult if the Treasury has the power to pass new tax provisions with the retrospective effect to   which we have referred. The Government justify their approach by pointing out that the new provisions will not affect the
	overwhelming majority of employers and employees
	who
	pay their fair share of tax and NICs.
	Only a small minority, however, have unreasonably
	sought to use sophisticated and complex tax avoidance schemes to pass more of a burden onto the rest of us.
	Businesses that have attempted to reduce their liability to pay national insurance contributions in accordance with existing legislation are therefore being vilified as antisocial.
	Ideally, we need Her Majesty's Revenue and Customs to set out its thinking on the principles guiding its intended implementation of this policy announcement. During consideration of the Finance (No.2) Act 2005, we called repeatedly for more attention to be paid to the pre-clearance procedure. The spectre of retrospection, and with it uncertainty, makes a pre-clearance process ever more important; otherwise, the Treasury seems to be relying on making any such schemes of arrangement so commercially unattractive that the need for retrospective legislation will be rendered redundant. That is more or less the nub of what the Paymaster General said in our exchanges a few minutes or go.
	That is not a sensible way to run commercial business. We need to encourage dynamism, flair and innovation. Sometimes, such innovation will get it wrong, but closing down these schemes will apply to flair and   innovation throughout our commercial world. A heavily regulated economy in every way will not be good news for this country. Flair and innovation are qualities not just of our tax advisers but of many inventors and people throughout industry. That has been one of the great strengths of this country over the past 300 or 400 years, and is one of the reasons why we are such an important trading nation. The worry with this sort of proposal is that it stifles those two important facets.
	We understand that the first use of powers in this area will be to amend the national insurance contributions regulations in parallel with the changes imposed in the employee securities element of the Finance Act 2005. That is unobjectionable, but there is a more fundamental question: now that national insurance involves only a notional contributory element, is it not time that the rules surrounding NICs are changed entirely to work alongside those of income tax?
	The Bill highlights once again the problem of having two taxes that basically cover earnings. Let us face it: the only reason for having NICs and income tax is to uphold the fiction that the basic rate of tax is 22 per cent., when it is really 33 per cent. That is an expensive fiction that costs businesses millions of pounds in administration each and every year. Perhaps things have now got to the point where it is necessary to consider a single stand-alone income tax with a basic rate of 33 per cent. and an employers' portion of 12.8 per cent.

Rob Marris: Again, I am following the hon. Gentleman's comments closely. He was taking about the risk of stifling innovation. Is he really suggesting that the self-employed, who currently pay, I think, 2.10 per week in class 2 contributions, would be rolled into a kind of super-income tax along with everybody else if his proposal to get rid of NICs were introduced? That might well stifle innovation in our economy, which has been a strength for 400 years.

Mark Field: It is a good attempt from Wolverhampton, but I was simply putting forward a broad idea that we need to give some thought to simplifying our taxation system. The contributory element of national insurance is fairly meaningless to a large extent.

John Butterfill: Will my hon. Friend also recognise that NICs are not paid by those who are over retirement age? His proposal would increase the taxation of those who had income in retirement.

Mark Field: If I am not incorrect, my hon. Friend is some 63 years old. I was his Whip at one time. I suspect that his observation might contain the smallest element of self-interest. I take on board his points, although given the great hopes for the Turner review, if the retirement age increases he might be chasing a particular dragon while he is still below that age. I will certainly have him in mind when it comes to the national insurance aspects of the question.

John Butterfill: My hon. Friend must also recognise that I represent a rather large number of pensioners in Bournemouth, West.

Mark Field: I have little doubt that my hon. Friend is younger than the average age of most of his constituents.

Ivan Lewis: To reinforce the point, the House might want to know that my grandmother lives in Bournemouth. I have a serious point, however. How does the hon. Gentleman square the proposal that he has just made on the nature of taxation with the fact that his party has just established a commission, under the chairmanship of Lord Forsyth, with a very clear remit to explore the barmy possibility of a flat tax?

Mark Field: The Economic Secretary knows that it is not a specific proposal. I was floating an idea, which is part and parcel of exactly what we are trying to achieve with the flat tax commission: simplifying the whole taxation system, which is a long overdue goal. In many ways, clause 1 seems to be worded with that sort of change in mind. In summing up, I hope that the Economic Secretary can confirm the Treasury's intention and indicate how such a process might be managed.
	I want to touch on three other aspects. First, there is the regulatory impact assessment in which the Government attempted to assess the Bill's potential impact. They concluded that the combined impact of the measures
	will not affect small businesses disproportionately.
	However, it should be remembered that small businesses are most dependent on attracting quality personnel, and therefore need to be able to offer tax-efficient employee incentive schemes. As the Government have already announced, the powers in the new Bill will be used first   and foremost to tackle NIC avoidance through employment-related schemes. It is suggested that that   will disproportionately affect businesses that the Government originally intended to promote by introducing tax-efficient employee incentive schemes. The position is made worse by the fact that employers cannot share any new unexpected liability to NICs with their employees.
	Secondly, there is the issue of disclosure, which the Paymaster General mentioned. Clause 7 suggests that the regime for NICs and income tax will be similar. It would be useful to hear from the Treasury how it will work alongside taxation specialists to ensure a smoothly operating system. Twelve weeks seems a relatively short period, given the importance of the work that must be done, and the differences between this regime and the income tax regime introduced in the Finance (No. 2) Act 2005. Naturally all sides would like as long a lead-in time frame as is practical.
	Much hinges in the future implementation of the intentions set out in this enabling legislation on regulation-making powers. The Bill brings NICs into the world of tax avoidance disclosure, and opens the way to retrospection. However, its operation, achieved by specific regulations that are highly technical and complex, will not be subject to full parliamentary scrutiny. Let us be honest: without significant outside expert help, there is little headway that any Opposition spokesman can forge even in Second Reading debates such as this. However, if such technical legislation with its retrospective element is brought in only via regulation, even when it is approved by statutory instrument, we run a real risk of adding to the statute book a series of poorly thought-through laws. My biggest worry is that that will result in employers and employees alike running the risk of being deprived of their property in an arbitrary manner.

Robert Flello: We are debating what could be described as one side of the Treasury coin, the other side being the Finance Act.
	I am not sure whether this is an ironic coincidence, but in the early 1990s I worked for a major firm of accountants. One of the directors had a particular claim to fame: within two hours of the Budget statement, he had worked out how to get around the proposed anti-avoidance measures. That scenario has continued for at least 15 years.
	I realise that the hon. Member for Cities of London   and Westminster (Mr. Field) has a particular   constituency angle to take, but why should hard-working lower-paid people in my constituency and other constituencies in north Staffordshire have to pay their tax and national insurance while those who can afford extremely competent tax specialists to advise them get around the legislation? Where is the fairness in that?

David Taylor: Does my hon. Friend agree that while the Bill is commendable in seeking to reduce avoidance, it is odd that the Government should at the same time be introducing self-invested pension plans that give huge concessions to very rich people, which people in north Staffordshire and north-west Leicestershire can only dream about?

Robert Flello: That is a good point, but what we are talking about is legislation that some members of the   wider community can get around, while others are caught by it. We may be seeking fairness and equity, but where would be the fairness if people working at Michelin in my constituency were offered payment in the form of animal skins? Where is the fairness in the old system of payment in hay for someone working at a pub such as the Potters Bar in my constituency?

Richard Spring: In the last seven or eight years, there has been a huge increase in the number of people at the lower end being sucked into taxation. The way to deal with the problem that the hon. Gentleman describes is to remove them from taxation, and that is exactly what the commission will deal with.

Robert Flello: In the 1980s, a huge number of my constituents were no longer required to pay tax or national insurance when the mines were closed, Shelton Bar steelworks was closed, and the pottery industry was hammered time and again.

Rob Marris: The aim of the Bill is to get rid of schemes involving gold bullion and so forth. Might not such schemes be encapsulated in the phrase fur coats and no NICs?

Robert Flello: I shall stop smiling at that one now. There was a scheme involving fur coats, and another involving oriental carpets. What would the reaction be if one of the Longton fire crews were offered payment in the form of oriental carpets? It is ridiculous. There must have been huge warehouses attached to Schipol airport in Amsterdam, given the amount of goods apparently sitting there waiting for an employee to pop across to collect and bring back to the United Kingdom.
	I would be somewhat concerned if one of the highly skilled, innovative and creative people working at Wedgwood in my constituency were offered payment in platinum sponge. Platinum sponge is not some nice little object that might be put on the mantelpiece; it is a highly volatile, unstable form of platinum. I would certainly not want to put that on my mantelpiece, and then take it down to the local market and trade it in.
	We have heard allusions to creativity and innovation, but what that really means is making sure that certain individuals can get out of paying what most of us have to pay in tax and national insurance. I have encountered arrangements in the past involving a room full of people and a pile of documents, each document carefully numbered and laid out because it is crucial for them all to be signed in the right order if the scheme is to work. Is that what is meant by the certainty to which Opposition Members refer?
	There is a fair amount of understanding among Opposition Members, however. I recall that in April 1995 a Conservative MinisterI forget which oneintroduced measures to stop what he described as a national insurance dodge using tradeable assets. The issue has been recognised for a long time. Obviously, paying someone in coffee beans to try to avoid national insurance is an appalling thing to do.
	In the past, certainly for the past 15 years or so,   we   have seen a cat-and-mouse game. A scheme, or anti-avoidance legislation, is introduced; tax advisers sit down and work out a way around it; the next Finance Bill tries to tackle it; someone works out a way around that; another Finance Bill is produced; and then we reach the position we are in now. North Staffordshire chamber of commerce, for example, says it wants much simpler, more straightforward Finance Acts. Time and again, however, recent Finance Acts have tackled avoidance schemes, which is why they have been so lengthy.
	This Bill is long overdue and would have been a very welcome legislative addition back in the early 1990s. Some 240 million a year is at stake, and north Staffordshire would certainly welcome the 10,000 new teachers that that money would fund. This money is owed to the Exchequer, and it is simply the use of creative schemes that has led to its not being paid. My constituents, who pay their national insurance and their tax, would welcome that money coming in to the Revenue to provide police officers, teachers and the like in our constituencies.

Vincent Cable: As the hon. Member for Cities of London and Westminster (Mr.   Field) acknowledged, we are dealing with rather recondite material and, unfortunately, I drew the short straw among my colleagues in deciding who would speak about it. But in terms of general principles, I   broadly endorse what the Government are trying to achieve through the Bill. My colleagues and I voted for higher national insurance contributions to fund the health service, so it follows that we want such revenue to be realised. There are two broad objectives: to ensure revenue integrity, and to reduce the cynicism that inevitably arises when some people pay their taxes but others manage to get round doing so. I understand the Government's broad strategic objectives, which seem perfectly sensible.
	The problem is that in talking generally about tax avoidance it is very easy to get into a moralistic mindseta mindset that crept a little into the Paymaster General's speech. Frankly, this area is an ethical quagmire. The Government were helped by a question posed by the Chairman of the Treasury Select Committee a few months ago. He asked what the difference was between legitimate and illegitimate tax avoidance, and the Paymaster General produced a reply that is well worth quoting because it provides a framework for this discussion. She said:
	The Government take steps to close down tax avoidance schemes as they become aware of them, particularly where they create economic distortions, provide commercial advantages over compliant taxpayers, redistribute tax revenues in an unfair and arbitrary manner, or represent an abuse that conflicts with or defeats the will of Parliament.[Official Report, 1 April 2004; Vol.   419, c. 1697W.]
	That seems a good working definition of the distinction between legitimate and illegitimate tax avoidance and, so far as it goes, perfectly sensible.
	However, on reflecting a little more, I concluded that what we are dealing with is not a simple, stark, clear-cut division between legitimacy and illegitimacy. There is a continuity or spectrum of behaviour, and at one extreme there are cynical and manipulative schemes. But at the other end of the spectrum, there are forms of tax avoidance that we all regard as perfectly legitimate and,   indeed, that the Government encourage. As I   understand it, part of the Financial Secretary's job is   to encourage tax avoidance. He introduces environmental taxes that, if successful, stop people doing certain things and therefore reduce Government revenue. That is the will of Parliament and it is sensible, good economics and good for the environment; but it is promoting tax avoidance.
	At the other end of the spectrum are these fancy avoidance schemes, but somewhere in the middle is the kind of behaviour that we all get up to in our private lives as we try to organise our affairs in such a way that we pay as little tax as possible, within the law. A few weeks ago, I was talking to my grown-up children, who live in London and are having horrendous problems dealing with their mortgages. I am considering making a gift from my modest savings in order to help them, and it occurred to meit certainly occurred to themthat if I manage to organise my affairs in such a way that I do not die in the next seven years, I will help them to avoid paying inheritance tax. That is tax avoidance. Of course, it does not fall within the Paymaster General's definition of illegitimacy because it does not constitute an organised scheme. But if instead of simply doing a back-of-the-envelope exercise, I did things properly and went to a financial adviser, an accountant or a solicitor, such a course of action would, I think, be illegitimate under the terms of the definition given. Certainly, the definition is hazy, so it is probably useful to approach it not in a moralistic way but in a practical way.
	The practical issue is how the Government can reduce tax avoidance. We are dealing with a very big area: in respect of this source of leakage, the figure of 300 million has been quoted. The Inland Revenue has estimated that it suffers itself from tax avoidance losses of some 2.5 billion to 3 billion in VAT, and probably 10 billion in direct taxation, so the Bill deals with only one corner of a much bigger problem.
	I turn to an interesting and important aspect of the Bill that is at the heart of some of the criticisms offered by the hon. Member for Cities of London and Westminster. The point was summed up by the Chairman of the Treasury Select Committee, when he said:
	What is new is the declaration that future schemes, not yet devised or which have not yet come to the Inland Revenue's attention, may be stopped as from 2 December 2004. This amounts to a general anti-avoidance rule in this area of taxation of income and rewards.
	That is not necessarily good or bad, but it does break important new ground by embedding in the legislation the principle of retrospective action. As the hon. Member for Cities of London and Westminster suggested, that could create problems in respect of one of the basic principles of taxation: certainty.
	In Committee, we shall doubtless confront a question that will be at the heart of public debate on this issue: whether the principle that the Government are introducing conflicts with fundamental principles in law as we understand them. The Institute of Chartered Accountants, which has looked at this Bill in some detail, questions whether this new principle is compatible with European law. I do not knowI am not a lawyer and certainly not a constitutional lawyerbut I draw the House's attention to a very important legal ruling that dates from April, through which the European Court of Justice is trying to tackle head-on the question of whether a measure such as the one before us is legitimate in terms of European law principles.
	One paragraph of that ruling appears to suggest that what the Government are doing is not compatible with European law principles, but another paragraph appears to constitute the Government's defence. It is worth quoting both, because they will prove central as this legislation proceeds. The first paragraph states:
	The principles of the protection of legitimate expectation and legal certainty form a part of the Community legal order. They must accordingly be observed . . . by the Member States.
	If it is correct that this legislation diminishes legal certainty, it may well violate European justice as it applies to tax law. The following paragraph, however, is   more qualified. It states:
	Although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication
	in other words, retrospectively
	it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned arc duly respected.
	A key issue will be whether the legitimate expectations of those introducing such schemes have been respected. It is a fairly narrow point and it is not clear to me who is right and who is wrong, but as the Bill proceeds we will need proper clarification of whether its legal basis has been thought through in terms of those wider principles.
	There are two other practical problems that the ICA and others have thought through, and on which the hon.   Member for Cities of London and Westminster touched. The first concerns a legislative principle and the way in which this House proceeds. As I understand it, one consequence of the manner of the Bill's introduction is that secondary legislation will be introduced at the same time as primary legislation, so   there will not be the traditional opportunity for a   12-month period of consultation of those affected by such legislation. I am not sure that I fully understand the   problem here, but it has been highlighted by the practitioners and it would be useful if the Government commented on it.
	The other practical problem, which the hon. Member for Cities of London and Westminster also mentioned, is the question of what happens to those employers who, although they are clearly party to such schemes, may not have prompted them. What happens if such an employer finds that, because the legislation is invoked retrospectively, in practice they cannot claw back concessions already made to the employee? Such an employer is the piggy in the middle who has been stuck with the liability. What is their position?
	In conclusion, I would like to summarise my argument by making two wider points. First, although   it is right and I fully support the idea of pursuing anti-avoidance as far as is possible and practical within the law, it is not always clear that the   Treasury's emphasis should be on anti-avoidance. It should reflect further on the problems created by   over-complexity. One of the leading authorities on British tax lawEdward Troup, who happens to be one   of my constituents and who frequently appears before the Treasury Committeesummarised the problem elegantly:
	The aim of Government should be to . . . do its best to ensure that the 'return' from tax planning is as low as possible . . . a simpler tax system with fewer reliefs, exemptions and discontinuities would, in the long term, frustrate most of the tax evaders' ploys . . . Management has to decide between whether 10,000 of tax planners' fees is likely to give a better post-tax return than the amount spent on, say, advertising. This judgement is not immoral, it is inevitable.
	That is why I and my colleagues, as well as the Conservatives, are looking further into the whole principle of tax simplification. Our commission got going a little quicker than theirs, but whether it will end up recommending some version of a flat tax, I do not know. I have an open mind on that matter. The underlying principle of pursuing simplicity is clearly very desirable.
	Finally, it is not a question of simplification alone. We   also need to focus more on the question of tax   administration and the competence of the tax administration authorities. I do not have many people in Twickenham running around with gold bullion, but I   have do have many people who work in the computer industry. They often send me e-mails from their occasional employer, the Inland Revenue, with positively hair-raising tales of computer breakdowns involving something called ERIC and management failures in the Revenue that are costing billions as a result of weak, unsatisfactory and badly managed revenue-collection systems. I do not know the truth in that matter: I am not part of it, but I see the fragments shown to me by people who are witness to it.
	I believe that more revenue could be realised by the Treasury through better tax administration and tax simplification than through the pursuit of anti-avoidance measures. As far as the Bill goes, the principles behind what the Government are seeking to achieve seem sensible, subject to the various specific legal and practical steps that we shall pursue in Committee.

Iain Wright: I begin by declaring an interest: I am a chartered accountant and before my time in the House I was employed by one of the big four accountancy firms. I worked in the noble art of corporate governance and risk management, rather than the possibly shady dealings of tax avoidance.
	I welcome the Bill enormously and sincerely hope that Conservative Members will not divide the House on it.   It continues the theme introduced by previous Governments of clamping down on tax-avoidance schemes, and it is right and proper that Governments of all political persuasions work to ensure that all businesses and employees pay the correct amount of tax   and national insurance contributions at the appropriate time.
	As my right hon. Friend the Paymaster General said in her opening remarks, the Bill advances the work that was started by the Conservative Administration. The right hon. Member for Hitchin and Harpenden (Mr.   Lilley), who is not in his place, looked into the problem when he was Secretary of State for Social Security in the John Major Administration. As my hon. Friend the Member for Stoke-on-Trent, South (Mr.   Flello) mentioned, the right hon. Gentleman announced in 1995 measures designed to stop a national insurance dodge of paying employees in tradable assets. In the following year, he announced further powers to stop the latest dodge of avoiding national insurance when employees were paid in their company's own shares. The Labour Government have continuedand, indeed, acceleratedthe trend, with measures such as bringing under PAYE assets readily convertible into cash in 1998, and dealing with employment-related shares in 2003.
	I therefore believe that there is a political consensus on this matter, and rightly so. However, over the past 20 years the fight against avoidance has been undertaken in an environment in which the schemes, or scams, have become ever more ingenious and imaginative. The Government have been sharp in closing loopholes, but rather like a fairground game where little squirrel heads pop up at random and have to be hit with a hammer, the Government spot one scam and then another pops up somewhere else.
	It is extremely lucrative for tax advisers to come up with ever-more imaginative schemes to avoid tax and national insurance, largely because the benefitsthe tax and NICs saved through avoidancefar outweigh the potential risks of fines and possibly having to pay interest on the tax. Some of the inventive scams to avoid NICs are far-fetched to the point of being comical. My hon. Friend the Member for Stoke-on-Trent, South mentioned oriental carpets, and when I was researching for my speech, I discovered a City worker who had been paid a bonus of oriental carpets worth about 100,000. The carpets were held in storage and then seemed to become magical, as they never materialised and were never seen in the home.
	Platinum sponges are another example. I have not done as much research on them as my hon. Friend the Member for Stoke-on-Trent, South, so I do not have a clue what they are. I do know three things, though: platinum sponges are not platinum jewellery; they are not sponges for washing; and, most importantly, they are in reality a scam to avoid paying rightful levels of national insurance contributions.
	It seems to me that an enormous amount of energy and resources from the Government are devoted towards ensuring that a small majority of highly paid earners pay the proper amount of tax and national insurance like the rest of us. Those resources could be redeployed towards services that are of real benefit to the country, such as improving public services and tackling family poverty. That is why I welcome the moves that the Labour Government have madefurther than any other Administration, in my viewin combating tax-avoidance schemes. The need for promoters of schemes to notify Her Majesty's Revenue and Customs of them is extremely welcome and long overdue. Rather than playing the squirrel game, the squirrels now have to tell the Government where and when their heads will be appearing. That may be less fun, but it is certainly a lot fairer.
	Yet this Bill goes one step further. I think that its   best   feature is the power to close down and backdate avoidance arrangements, where necessary, to 2 December 2004. I strongly believe that advisers, companies and workers were given adequate notice of the Government's intentions in the 2004 pre-Budget report. Reviews in the press this week seem to suggest   that the Government's objective will be achieved. Mike   Warburton, senior tax partner at Grant Thornton, was quoted this week in Accountancy Age as saying that the Bill
	makes it very debatable whether it's worth anybody's while doing things that are seen as aggressive by HMRC.
	Quite right.
	I want to end on the central theme of why I welcome the Bill most of all. Much as I love technical accountancy jargon, the Bill is not purely about rectifying technical inconsistencies and loopholes in the tax regime. First and foremost, it is all about fairnessfairness for all those who pay income tax and national insurance contributions. Why should a privileged fewmostly in the City of Londonbe allowed to cheat the vast majority of hard-working taxpayers and users of public services by not paying the rightful amount? It borders on the immoral. Why should hard-working families in Hartlepool, who pay tax and national insurance contributions through the PAYE system and have no control over the manner in which they are paid, subsidise the avoidance efforts of a wealthy elite?
	I hold weekly surgeries and I have to confess that no constituent has ever expressed concern that we are restricting the use of platinum sponges as a means of rewarding employment. That is what this Bill is aboutfairness for all taxpayers, not favouritism for a few.
	This is not a Bill that takes the food out of the mouths of hard-working families who are struggling to make ends meet. I have no doubt that the people whom the Bill will affect most are hard working, but they are, after all, paid handsomely for what they do and their remuneration is getting better. Only this week in the Financial Times, in an article entitled Bank staff do best as City pay increases, I was informed that, before the payment of winter bonuses, directors, senior analysts, corporate financiers and fund managers have seen their basic pay rise by 9.2 per cent. since this time last year, to an average basic salary of 76,950and bonuses are expected to be larger than last year, too, after a buoyant summer with lots of mergers and acquisitions. The media also reported this week that as many as 3,000 bankers and brokers will earn about 1 million each in bonuses alone after the best City performance for years.
	Those figures are hardly typical of a financial sector on the bones of its backside. I do not begrudge those bonuses at all, although I should like some of the City pension fund managers who might receive them to have a word with my constituents in the Expomet and Roxby companies who face missing out on the final salary schemes that they have paid into for years. It is only right that the very small number of taxpayers involved should pay the correct amount of tax and national insurance.
	I hope that I have made it clear that I strongly believe that the Bill is all about fairness. I fully support its objective, and urge the House to give it a Second Reading.

Andrew Pelling: The hon. Member for Hartlepool (Mr. Wright) said that he did not begrudge the fantastic bonuses earned by people in the City of London, but he seemed unhappy at the City's success in promoting income for the UK. I find it hard to understand what he meant.
	It is fair to say that for a long time there has been a great deal of invention when it comes to payment. The practice started in the late 1980s and early 1990s with the   use for payment purposes of gold bars or red wine. That was an extreme attempt to abuse the tax system, and the Paymaster General has said that the Bill is designed to deter such behaviour. It may be inevitable that such deterrence must be continually reinforced when a tax system is complicated and encourages the former colleagues of the hon. Member for Hartlepool to indulge in yet more invention.
	I listened carefully to the hon. Member for Stoke-on-Trent, South (Mr. Flello), who said that he had colleagues who could find a way around any proposal within two hours of its announcement in a Budget speech. Although I approve of the Bill's proposals to bring NICs into line with the income tax avoidance regime, it is a pity that the House should have to devote so much effort to simplifying the tax system.
	The complication of the tax system has been compounded by the imposition of many regulations since 1997, which has served to fuel the further growth of the tax avoidance industry. The implementation of a general anti-avoidance rule in a one-sided, broad-brush attempt to simplify matters for the Treasury is unreasonable, given that it maintains a web of bureaucracy for business.
	I also listened carefully to the hon. Member for Twickenham (Dr. Cable), who asked whether the aim should be to have a correct level of taxationas the hon. Member for Hartlepool maintainedor a fair one. I,   too, shall quote Edmund Troup of Simmons and Simmons, who said:
	Faith in general anti-avoidance provision is based on a lack of understanding of the real nature of tax avoidance. The popular idea is too often confused with the claim that 'tax avoiders are paying less than they should', even though there is no objective way of determining how much they 'should' be paying.
	The balanced way to reduce tax avoidance is to simplify the system and cut down the number of limits and exemptions. As has been noted, the shadow Chancellor's tax reform commission is a step in the right direction. A flat taxation system would be likely to promote the payment of more tax, rather than less, and would certainly discourage avoidance.
	The Paymaster General has said:
	The Exchequer is entitled to certainty on behalf of the taxpayercertainty that taxpayers will pay their fair shareand, similarly, that taxpayers who contribute their fair share have a right to expect others to do so.[Official Report, Standing Committee B, 21 June 2005; c. 57.]
	That is reasonable, but any assessment of what constitutes a fair share must be subjective when it is made in the context of a tax structure as complicated as ours. Simplifying the system would remove the motivation for tax avoidance. As my hon. Friend the Member for Cities of London and Westminster (Mr.   Field) said, it is important that we promote the role of wealth creators rather than wealth protectors.
	The question of retrospection is the most important element of the Bill. It is something that the UK has always steered away from instinctively. Yet, for all the Paymaster General's reassurances, not only does the Bill allow for retrospective action, it also moves the decision away from primary legislation to regulation. In opposition, the Paymaster General said of value-added tax:
	In such a case, the retrospective nature of the law is in principle objectionable. It means that the VAT liability of supply can be changed by an event occurring after the supply is made. There may be arguments that the principle is contrary both to United Kingdom principle and to EC law.[Official Report, 3 April 1995; Vol. 257, c. 1412.]
	Yet a decade later

Dawn Primarolo: Will the hon. Gentleman give way?

Andrew Pelling: Certainly, if the Paymaster General wants to correct me.

Dawn Primarolo: The hon. Gentleman should also quote the Minister who responded to me at that time with an explanation of why the Government's action then was justified.

Andrew Pelling: I understand why the Paymaster General makes that point, but institutionalising retrospection and raising the possibility that a business or person might have to make retrospective payments to HMRConly for more legislation to be introduced when it is decided that the rules must be changedis most regrettable.
	The most important thing is certainty. The problem with the Bill is that it will not bring certainty to the tax regime.

Philip Dunne: I share the concerns about the Bill expressed by my hon. Friends the Members for Croydon, Central (Mr. Pelling) and for Cities of London and Westminster (Mr. Field), especially about the Bill's retrospective nature.
	I understand the desire expressed by the Chancellor, the Paymaster General and other Opposition Members to minimise the scope for remuneration contrivances to escape the tax and national insurance net. Indeed, I have considerable sympathy with the objective of dealing with the imaginative but essentially contrived schemes about which we have heard. I confess that the use of platinum sponge is a new one on me, too.
	However, my concerns go beyond the specific provisions of the Bill. This country has rightly earned great respect in the international business community for the probity of our laws and customs. Indeed, even the HMRC has commanded respectif little lovefor the certainty, if not always the clarity, of its decisions. As   we have heard, companies, individuals and their   advisers have long enjoyed the ability to base their commercial decisions on a principle of certainty in respect of the tax laws at the time those decisions were made. The law has always been open to interpretation, which has enabled the entire tax advice industry to flourish, but commercial decisions could be made according to the law prevailing at the time.
	Unfortunately, the Bill reinforces a very unwelcome principle that has been introduced into our tax lawthe ability to change the rules as the Government choose. The Institute of Chartered Accountants has expressed concern about that, as the hon. Member for Twickenham (Dr. Cable) noted. In its briefing paper, the ICA said:
	Retrospective legislation is not a satisfactory solution: not only does it make for uncertainty for employers but there is a real probability that it is ultra vires European Law.
	My views on Europe may not be well known in this   House, but they are to my constituents and it is extremely rare for me to find comfort in pronouncements from Europe. However, as we have heard from the Liberal Democrat spokesman, there is some case law that needs to be explored in Committee, not least because the Institute of Chartered Accountants states:
	We do not think that anyone reading the Paymaster General's 2 December 2004 statement could have expected the content of this Bill.
	Labour Members have focused much of their enthusiasm for the Bill on the impact it may have on fat cats in the City, and reference has been made to the large sums that many people earn there. The issue is not confined to the City of London, however. In my constituency, there is an individual who sells millions of pounds-worth of perfume to the far east, on which he earns substantial commission. That gentleman could take his business anywhere in the world, and I should like to focus on that point.
	The Prime Minister appears to have woken up only relatively recently to the challenges of globalisation, but the economy has been at the forefront of global trade for   centuries. Since 1979, as economic liberalisation has been successively introduced, mostly under the previous   Conservative Government, increased inward investment to the UK has provided a major boost to economic growth and productivity. The scale of that investment is well illustrated. The Paymaster General has unfortunately left the Chamber so we cannot confirm whether her regular morning reading includes The Daily Telegraph, but I shall quote a brief extract to illustrate my point:
	Overseas investors own more than a third of the 100 blue chip companies listed on the London Stock Exchange, 10 of those aren't even British, 250 of the 1,066 top flight directors are foreigners and some of our most important industriessuch as energy and bankingare largely controlled by European and US   companies.
	We can thus see that a significant proportion of senior executives in leading companies across industrial sectors, as well as many of those sustaining the City of   London's global position in financial services, are foreign nationals, often working for foreign firms. I   speak with some authority as a few years ago, before I came to this place, I worked for a foreign-owned bank.
	The relevance of those points to the debate is twofold. First, from an individual point of view, a large number of highly skilled and highly rewarded individuals currently choose to work in the UK in roles that they could also undertake overseas. It is not beyond their wit to try to weight their remuneration away from the higher tax jurisdiction. With modern technology and working practices, especially in the service sector, there is a real risk that by introducing retrospection to our tax system for individuals, doubt will be cast over our personal taxation system, which will encourage income to be earned overseas and, perversely, may reduce rather than increase the return to HMRC.
	Secondly, from a corporate perspective, the more worrying implication is the doubt that retrospective tax legislation introduces in the fairness of the tax system operating in this country. In a global market, companies   can choose where to operate. Businesses are highly flexible and many can move their operations to   jurisdictions where they perceive commercial advantage. We are increasingly used to the advantages of China and India, about which we hear so much from the Chancellor, in relation to labour-intensive activities, but the capital-intensive sector, where many of these proposals are directed, is highly mobile. A good example is reinsurance, a completely mobile activity, much of which has moved to Bermuda over the last 10 years. Such sectors often remunerate their employees very well.
	My concern is that when HMRC is both judge and jury and tax legislation is introduced with retrospective effect, it could seriously erode confidence in the fairness of our tax system. The Government need to take great care. I am not sure whether the Economic Secretary is aware that the last time retrospective tax measures were introduced was under the last Labour Chancellor, Chancellor Healey, and look what happened to him. The serious point is that if companies lose confidence in the tax system, those that are not in this country will think carefully before they choose whether to come to the UK or locate elsewhere. Those already in this country, especially if the breach in the dyke were to be widened with further retrospective proposals, might eventually consider moving away. That would damage the economy, damage confidence in our tax system and damage the Government's tax revenues.

Stephen Hammond: First, I declare an interest. I was one of the gentlemen who worked in the City, although I assure the hon. Member for Hartlepool (Mr. Wright) that I have neither a magic carpet nor a cellar full of wine.

Rob Marris: What about a platinum sponge?

Stephen Hammond: I have washed this morning, but not with platinum.
	The Paymaster General left us in no doubt that the Bill was designed to stop evasion of national insurance contributions by introducing powers that enable the Treasury to make regulations to prohibit the use of avoidance schemes with retrospective effect from 2 December 2004. When the Economic Secretary winds up the debate, I am sure that he will make the valid point that such an intention was set out by the Paymaster General on 2 December 2004 and that the Bill merely brings the national insurance regime into line with what the Government enacted in the Finance Bill this year, so I understand the right hon. Lady's comment that she regards the legislation as non-controversial.
	There are four aspects of the measure that we need to consider, however. Much has already been made of the retrospective nature of the Bill, but we should also consider possible use of the powers beyond that for which they were intended; the whole issue of avoidance, evasion and tax-planning; the introduction of an anti-avoidance rule, to which the Liberal Democrat spokesman referred; and the potential cost to business. I want briefly to examine those issues.
	I had the privilege to speak on Second Reading of the Finance Bill and served on its Committee, where luckily the hon. Member for Wolverhampton, South-West (Rob Marris) helped us through the explanatory notes. I congratulate the Paymaster General and the Economic Secretary on this Bill, which is to be applauded for its brevity, clarity and its helpful explanatory notesquite a contrast to the Finance Bill.
	The hon. Member for Hartlepool seemed to question the position of Conservative Members. My hon. Friend the Member for Cities of London and Westminster (Mr.   Field) has made it clear, not only today but in previous debates in the House, that we do not support anyone who does not want to comply with their tax obligations. That is our position and it extends to national insurance contributions as well.
	The Bill, as I understand it, contains three measures: the power to make regulations to create a retrospective liability for national insurance contributions; to allow the disclosure of national insurance contribution avoidance schemes and arrangements; and the voiding of those arrangements and elections. Much has been made of retrospection by my hon. Friends. Any legislation that introduces retrospective powers must be regarded with caution. Understandably, taxpayers are   instinctively nervous, for with the prospect of retrospection they also face the prospect of uncertainty and unfairness. Furthermore, and more important, it creates uncertainty for business and especially for business investment. Certainty is a key component in the environment for business investment and one criterion on which business undoubtedly bases its decisions is the existing tax and national insurance burden it is likely to   face, or the likely burden when a decision is made. If   the Government constantly introduce legislation with retrospective effect, it will undoubtedly create uncertainty for business and will affect business investment. An inevitable consequence of the Bill will be some undermining of business investment.
	The power to create regulations for retrospective liability is enacted in clauses 1 to 4 and although those clauses confer that power on the Treasury, the Bill also supposedly constrains the power to the extent that such regulations can be made only to reflect in national insurance regulations previous retrospective changes to the income tax Acts, only where the Treasury considers it expedient for national insurance contribution regulations to have that retrospective effect, and only back to 2 December. However, in all those cases the Treasury is acting as its own constraint, so we need reassurance from the Treasury about the scope of the powers, the exact nature of the constraints and the way in which they will be used. The explanatory notes state that the powers will be used only in anti-avoidance measures. That is not helpful, reassuring or terribly explanatory. The Government will want to reassure the House that those powers will be proportionate to the   mischief that they aim to tackle, and that they are sufficient only to catch tax avoidance schemes. They should not be so wide that they are disproportionate, and taxpayers' legitimate expectations to be taxed in accordance with the law when the transaction is carried out should not be abused.
	Clauses 1 to 4 will be used to bring national insurance contributions regulations in line with regulations imposed by schedule 2 of the Finance Act 2005, especially in relation to employee securities for taxation purposes. If I understand clause 1 correctly, the powers will be used to ensure that, where possible, NIC and income tax PAYE legislation are changed in parallel. If that is the Treasury's intention, it would be useful to know that the process will be managed. It is desirable that NIC and income tax disclosure rules be made in parallel. Clauses 1 to 7 suggest that that is the intention behind the Bill, but I should be grateful if the Economic Secretary answered some practical concerns. If the rules are included in regulations as secondary powers, as the Bill suggests, when will the draft regulations be available? Will the Economic Secretary confirm that they will be subject to proper scrutiny and that the disclosure rules for national insurance and income tax will be similar?
	The Government's attitude to tax planning, as opposed to tax avoidance, has been subject to a great deal of criticism, and the issue was raised several times in the Finance Bill Committee. It bears repetition that planning tax liabilities is entirely lawful, but in the Bill the Government appear to maintain their stance that any tax planning is avoidance. Taxpayers have the right to organise their affairs in accordance with the lawthat is tax planning. If the Government deem that law inappropriate, that is not the taxpayer's fault. Tax planning should not be confused with tax avoidance.
	The Government are pursuing something that began in the Paymaster General's statement on 2 December 2004 and, indeed, the Finance Act 2005. The Bill is widely drawn and tax authorities are given wide discretionary powers, so the Government are effectively introducing the general anti-avoidance rule that they first sought to introduce in 1997. In 1997, the Chancellor asked the Inland Revenue to investigate the impact of a general anti-avoidance rule, but, following objections, the Government pursued the disclosure regime route. However, if disclosure legislation is too widely drawn its powers extend beyond those of anti-avoidance or appropriate disclosure regimes, as wide-ranging and arbitrary powers are introduced for tax authorities that go well beyond the mischief that they are intended to address.
	In a statement on the pre-Budget report in December 2004, the Paymaster General stated:
	The disclosure rules in the Finance Act 2004 have revealed that avoidance is still rife.
	She went on to say that
	experience has taught us that we are not always able to anticipate the ingenuity and inventiveness of the avoidance industry. Nor should we have to.
	She concluded that
	the time has come to close down this activity permanently.
	The Select Committee on Treasury has no doubt that the Government moved from a disclosure regime to a regime of general anti-avoidance rules. Its Chairman, the right hon. Member for West Dunbartonshire (Mr.   McFall), stated:
	What is new is the declaration that future schemes, not yet devised or which have not yet come to the Inland Revenue's attention, may be stopped as from 2 December 2004. This amounts to a general anti-avoidance rule.
	The Government must address certain issues if they wish to move from a disclosure regime to a regime for the taxation of rewards and national insurance. If a general anti-avoidance regime is deemed necessary because avoidance is supposedly rife the Government may fall into the trap of creating more tax legislation of increasing complexity and thus an increasing number of   opportunities for the clever gentlemen described by   the hon. Members for Stoke-on-Trent, South (Mr.   Flello) and for Hartlepool to devise tax avoidance and evasion schemes. It is therefore disappointing that the legislation has been introduced, because it highlights the need for a simpler tax system with fewer reliefs, exemptions and discontinuities to thwart most tax avoidance

Rob Marris: The hon. Gentleman has put the cart before the horse. We have complex tax legislation because there are anti-avoidance schemes. We do not have anti-avoidance schemes because of complex tax legislation. If one looks at the history one can see which came first and thus which is the cause and which the effect.

Stephen Hammond: I beg to differit is the hon. Gentleman who has put the cart before the horse. There are more members of the tax planning community because the Government are creating more complex legislation, in which tax planners seek to pick holes.
	Tax practitioners acknowledge that measures in the Bill will act as a deterrent impact, but Joy Svasti-Salee of KPMG says that
	they create uncertainty which is not good.
	It is not clear which schemes will be allowed and which prohibited when they are left unspecified by a general catch-all. By contrast, specific laws would aim to define abuse and avoidance. Discretion has been granted to the authorities over NICs and income tax but, as my hon. Friend the Member for Cities of London and Westminster said, that should go hand in hand with binding tax and NIC clearance granted by the HMRC when its opinion or advice is sought about a tax scheme by a taxpayer prior to making certain decisions about the structure of their financial affairs.
	HMRC has resisted that proposal, and undoubtedly the Paymaster-General will repeat that it is not in the business of giving free tax advice. That argument falls, because she has changed the rules, and if a specific proposal is taken to HMRC on a matter of tax or NIC policy in which the authority has acknowledged and increased discretion, it is wholly appropriate that it should have a duty to give a ruling about how it will exercise those powers prior to the implementation of a scheme.

Dawn Primarolo: The hon. Gentleman's argument is based on a fundamental misunderstanding. The Bill does not give discretion to HMRC. The House will decide whether avoidance schemes are to be closed down as a result of the proposal in both the Finance Bill, which introduces primary legislation on income tax, and in national insurance regulations, which are subject to the affirmative procedure. It is the House that takes the decision and no one else.

Stephen Hammond: None the less, if discretionary powers are to be increased overall[Interruption.] There is obviously a dispute about whether the Government are increasing discretionary powers. It is clear, however, that the Bill fails to introduce a corresponding binding clearance regime, even though that would be desirable.
	Finally, what are cost implications of the Bill for   business? The regulatory appraisal says that employers who have engaged in avoidance must submit   supplementary end-of-year returns for NICs. According to the explanatory notes, that will affect only 500 employers and will not cost more than 3,000 per employer. Does the fact that the number of affected employers is small show that the previous regime was   working? Who calculated the 3,000 cost? The regulatory appraisal says that 21,000 small businesses and a further 90,000 self-employed people will incur small familiarisation costs, which is a big extra burden on business. Who made that estimate and who judged the costs to be negligible? The explanatory notes say that the measure will generate an additional 95 million in NICs in 200405, and 240 million per annum thereafter. The HMRC website, however, states that the Bill will secure tax and NIC yields of 200 million in   200405 and 500 million thereafter. It will be interesting for the House to know which of those is correct.
	There are elements of the Bill that may be regarded as   non-controversial, but we need to explore the possible use of the powers beyond the purpose for which   they are intended, the avoidance v. tax planning issue, the introduction by the Government of a general anti-avoidance rule, and the potential cost/benefit of the measure for business.

Richard Spring: Nobody could dispute the important principle that illegitimate tax avoidance must be dealt with, but as we heard in our debate today, there are issues concerning certainty, which means that we must consider legislation such as the Bill with great care and sensitivity.
	I have two general points to make. First, simplifying the tax system as a whole would, over time, reduce the desire to avoid tax by complicated schemes, NIC schemes or other forms of avoidance. However, as emerged clearly today, retrospection should be used very sparingly indeed. I fear we risk moving away from that principle as the Government desperately try to fill their black hole. Secondly, the increasing burden on small businesses from filling in extra forms and providing even more information to the Treasury as a result of the Bill must be considered in the context of the ever increasing weight of bureaucracy.
	I thank all those who spoke in the debate. I was particularly pleased that we had a contribution from the hon. Member for Stoke-on-Trent, South (Mr. Flello), because I see that before he came to the House he was a tax consultant and worked for the Inland Revenue, so I   am sure he will make worthwhile contributions to discussions on these matters in future. He spoke about gold, mink coats, coffee beans and other esoteric items. I worked in the financial services industry until 1992, but none of these was on offer, as I recall, though apparently that did happen.
	The hon. Member for Twickenham (Dr. Cable) was right to say that it is difficult to brand something as wholly legitimate or wholly illegitimate. There is indeed a spectrum, and in the present context situations are not   always clear cut. I agree that we are discussing a   practical issue. He spoke, for example, about the   clawing back of concessions already made to employees, again taking up the powerful point about the   over-complexity of regulations and the tax system. I hope Ministers will recognise that.
	The hon. Member for Hartlepool (Mr. Wright) declared how virtuous he had been in his previous life. I   say to him as gently as possible that the words virtue and Hartlepool are not automatically associated in people's minds in the House. I feel sure that he will overcome that in due course. He spoke about NIC scams, the issue of retrospection, and very high salaries in the private sector. However, high salaries are not confined to the private sector. He will know what goes on in local government and the sort of salaries paid to people in primary care trusts and the NHS.
	My hon. Friend the Member for Croydon, Central (Mr. Pelling) rightly pointed out that complexity encourages avoidance. That is the theme that has run through the debate. Simplifying the system would increase revenue and promote certainty. My hon. Friend spoke of wealth creation and the important role of wealth creators in our society. My hon. Friend the Member for Ludlow (Mr. Dunne) spoke about uncertainty and the fact that the Bill reinforces the principle of retrospection. He was right to say that there was always the risk that people coming to work in the United Kingdom from abroad had arrangements for a proportion of their remuneration to be made elsewhere. He noted that we were in a globally competitive marketplace for good people. The City of London is hugely important to our financial and economic well-being, and he was right to highlight the re-insurance market.
	In a thoughtful contribution, my hon. Friend the Member for Wimbledon (Stephen Hammond) emphasised the need for great caution with regard to retrospection. He spoke of the importance of certainty for business investment purposes, the threat of investment being undermined by the lack of certainty, the importance of defining constraints and the movement towards a more general anti-avoidance culture, with all that flows from it.
	Many experts have commented that we need more assurances on the scope of the proposed powers and the way in which they will be used. It is not sufficient that the   explanatory notes state that the retrospective powers will be used only in anti-avoidance situationsa point made tellingly by my hon. Friend the Member for Cities of London and Westminster (Mr. Field). Who will judge what constitutes unacceptable avoidance? We need to treat retrospection with great care.
	Many firms will be setting out their tax plans and accounts for the forthcoming year and will already have done so for the previous year. In its 2004 pre-Budget report, the Treasury Committee stated in respect of retrospection:
	The Inland Revenue should, without jeopardising their position, publish a paper setting out their thinking on the principles which will guide the way they implement this announcement.
	The explanatory notes, though welcome and clear, are not a full and satisfactory substitute for such a paper. At least businesses will then have additional certainty about how the law will apply to them.
	Clause 1 seems to indicate that the powers will be used in such a way as to ensure that as far as possible NICs, income tax and PAYE are changed in parallel. Although we welcome the assurance from the Paymaster General that businesses would be given time, a coherent approach is necessary and we would welcome the Government's assurance that that is their intention and details of how it is to be orchestrated.
	After reading the explanatory notes, outside observers were struck by the fact that the overview of statutory payments in annexe B is an illustration of how   much work has to be done by employers on behalf   of the Government in handing out the benefits. In the regulatory impact assessment, the Government attempted to assess the Bill's potential impact and came to the conclusion that the combined impact of the measures included in the Bill
	will not impose significant additional burdens or costs on employers unless they engage in contrived schemes to avoid income tax and NICs on remuneration paid to their employees.
	They further state that the NIC avoidance measures are   not aimed at businesses of any particular size and will not affect small businesses disproportionately. However, it should be remembered that small businesses may find it more difficult to attract quality personnel, and therefore need to be able to offer tax-efficient employee incentive schemes.
	As the Government have already announced, the powers in the Bill will first be used to tackle NIC avoidance through employment-related securities. It has been suggested that that will disproportionately affect the businesses that the Government originally intended to promote by introducing tax-efficient employee incentive schemes such as the enterprise management incentive scheme. That requires clarification. I do not expect the Minister to comment specifically on the scheme this afternoon, but it would be useful if he could write to me explaining how such a scheme is likely to operate in future.
	The enterprise management incentive scheme was introduced in the Finance Act 2000 and it neatly demonstrates the conflicting and contradictory aims that may be the result of complicating the tax system and over-regulating the business community. The scheme was designed to help small, growing companies to recruit and retain high-calibre individuals who would otherwise be attracted by more established businesses offering better salaries. A qualifying company is allowed to grant share options worth up to 3 million to any number of its employees. No tax or NICs are payable on the grant of the share options, provided that they are capable of being exercisedand are exercisedwithin 10 years. If, on the exercise of the share option, the price at which the employee can exercise the option is at least equal to the market value of the shares when the option was granted, no tax or NICs are charged.
	While such schemes are welcome for trying to help   smaller, entrepreneurial companies to attract and   recruit high-quality individuals, the Bill might disproportionately affect the very companies that the Government are trying to help to implement similar schemes, for similar purposes, by mitigating the amount of NICs that they pay. I am thus citing a practical example of what we are talking about, so I would like the Minister to shine some light on how the system is likely to work in practice.
	We have seen huge growth in the size of the Red Book over the past few years, and our tax system is now very complex. A frenetic game of cat and mouse has been played on tax avoidance, primarily regarding NICs, between the Treasury and the Revenue, and the tax advisory sector, which devotes ever-increasing amounts of time and effort to exploiting legal loopholes in   legislation to minimise NIC liability or other forms   of taxation. The whole tax advisory business has   blossomed under this obsessively bureaucratic Government.
	The need for Government revenue and the complexity of the tax system provoke and increase attempts at avoidance because they cause too many loopholes to be exposed. If the Government are intent on continuing to deal with the symptoms rather than the cause, the patient will continue to get sicker. Meanwhile, an annual dose of alternative medicine in each Finance Act will simply not give us a long-term cure.
	It has been estimated that 21,000 small businesses, and perhaps a further 90,000 self-employed persons, will incur learning and familiarisation costs as a result of the Bill. Ministers must realise that regulations do not exist in a vacuum. Once they leave Whitehall they do not simply float away. Regulations have had a significant and direct effect on businesses that have to devote time and resources away from increasing production so that they can focus on compliance with Government regulations.
	The British Chambers of Commerce says that the total cost of regulation to British business is now running at many billions of poundsit has increased dramatically. The Government have introduced over 27,000 regulations since coming to office, which is an average of nearly 4,000 each year, or 15 new regulations every working day. They have hugely increased the burden of regulation since they came to office.

Rob Marris: The hon. Gentleman referred to HMRC estimates that 21,000 small businesses and perhaps 90,000 self-employed persons could incur learning and familiarisation costs. Those businesses and individuals specialise in accountancy and tax. Is he saying that a reason not to have anti-avoidance legislation is the fact that accountants would have to read a bit more?

Richard Spring: I always love the hon. Gentleman's interventions as he is defending and promoting the interests and growth of the tax advisory sectorthey are magnificent. There is no one who does not get his valued attention, and I hope that he will serve on the Bill's Committee to add to the enjoyment of Ministers.
	Does such a form of government by regulation help to explain why our competitiveness has been shrinking, which is a problem that we will increasingly face in years   to come? Does the Chancellor believe that our businesses should be tied up by spending more money not on investment and development, but rather on complying with copious Government regulations?
	Of course illegitimate tax avoidance is unacceptable and should be dealt with, but the context in which many Government regulations are promulgated is making Britain a less attractive place to do business. If business investors are intimidated about setting up business heredue to lack of certainty, or a perception that retrospection will become an increasing part of the culture of doing business in this countrywe will ultimately be the losers, so the matter must be treated with more sensitivity for the future economic growth and performance of this country.

Ivan Lewis: This has undoubtedly been an interesting debate about an important Bill that is absolutely central to the Government's aim of deterring tax and NICs avoidance. Before I address some of the specific points raised during the debate in a little detail, I shall reiterate the Bill's purpose.
	The Bill demonstrates our continuing commitment to take action against avoidance. It is key to achieving the Treasury and Government's objectives of fairness and opportunity by ensuring that all pay the correct amount of tax and national insurance. It is an essential element in building a serious and credible deterrent against future avoidance activity, and is needed to secure a total tax and national insurance yield of 200 million in 200405 and 500 million a year thereafter. As the income tax disclosure provisions have demonstrated, it   is not possible to anticipate the range and complexity of such extremely contrived arrangements. The Government intend to close down such activity permanently. The Bill will ensure that the Government can deal with any arrangements that emerge in future that are designed to frustrate their intention that employers and employees should pay the proper amount of national insurance on the rewards of employment.
	I now come to specific points raised during the debate. The hon. Member for Cities of London and Westminster (Mr. Field) made a typically reasoned and   fair speech. Indeed, it was based in the real world to a large extent, but when he talked about sitting on this   side of the House and visiting the constituency of my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) one day, it began to reach the realms of fantasy.
	The hon. Gentleman seemed to advocate the virtues of a flat tax. I tell him that we will make it absolutely clear to the British people at every opportunity that if the Conservative party were ever to govern this country, it would impose on the people a flat tax that would be both unfair and impractical. The people of this country will make judgments about the nature of such policies when the time comes.
	The hon. Gentleman used the phrase desperate Treasury and that sentiment was echoed by several Conservative Members. That desperate Treasury has delivered to this country low inflation, low interest rates,   2 million new jobs and the lowest unemployment in living memory. Let us be clear what the business community asks of any Governmentthat they deliver   stability. If a Government deliver economic stability, businesses will grow and prosper. No Government since the war in this country have delivered such macro-economic stability as ours, so let us stop the nonsense of labelling the Treasury as desperate, or of saying that measures such as the Bill somehow undermine business competitiveness.
	The hon. Gentleman talked about bona fide avoidance schemes, although I am sure that he did not mean to do so. There is no such thing as a bona fide avoidance scheme, although his comment colours several contributions made by Conservative Members. Avoiding taxation is not a demonstration of flair and innovation. If we gave people the impression that we will incentivise, reward and encourage flair and innovation in the context of avoiding tax responsibilities, what kind of message would we be sending to the private sector in this country?

Mark Field: I think that the Economic Secretary will find that the record shows that I referred to bona fide remuneration schemes earlier on.
	The hon. Gentleman makes an important point about flair and innovation. I tried to make as balanced a point as possible about that in my speech. Flair and innovation mean not just the flair and innovation of the brightest tax and employment benefit remuneration scheme advisers, who try to find small differences between their schemes and those proposed by the Government so that they can avoid taxes. Flair and innovation have a far more important part to play. My hon. Friend the Member for Ludlow (Mr. Dunne) and I made it clear that flair and innovation have made this country a great trading nation over many centuries. We play around with those facets at our peril.

Ivan Lewis: I agree entirely with the hon. Gentleman. I shall read out the recent result of a survey. It reads:
	London has been named the best European city in which to locate a business for the 16th year in succession.
	That is according to an annual survey.
	The United Kingdom capital has also increased its lead over second place Paris and third place Frankfurt.
	That is what the latest European Cities Monitor shows. London came top in five of the 12 categories questioned in the survey, including the quality of staff. Any suggestion that there is any undermining of flair and innovation by the Government's policies, economic or social, is arrant nonsense.

Mark Field: I will not take any personal credit for London's great name in this regard. There is an important point in relation to flair and innovation, in that we are talking of a global market. We are quite happy with and proud of our record against other European countries, but we are inward looking if we believe that our success against Paris, Hamburg or Munich is enough. There are 23 cities with a population of 2 million or more. Cities are fast growing In China. There are cities growing up from Delhi to Bangalore. There are other such cities in India. We exist in a global market and it shows a paucity of aspiration simply to make reference to our success in competitiveness, flair and innovation by comparison with our European neighbours.

Ivan Lewis: By any international comparison this country is doing well economically. Having said that, we have a long way to go. There are many other countries that would die to have low inflation, low interest rates and the levels of unemployment that this country has, as well as, alongside that, our level of investment in the public good and in public services. There are so many countries that would aspire to achieve the combination of economic stability and economic success alongside social justice, which arguably has been uniquely the success of this Government. That is in the context of the global challenges that lie ahead.
	We are not complacent. We recognise that the challenges that will come at us in future from India and China require us to raise our national game even further in skills, innovation, long-term planning and in sensible and active regional policy. We recognise also that there   is a constant need for the Government to be   encouraging the country to be dynamic and to be accelerating the pace of change. It is necessary to recognise the real challenges that come as a consequence of globalisation.
	It would be churlish of any Opposition Member to start lecturing the Labour party on economic policy or economic performance. The worst thing that business could face would be a return to boom-and-bust economics. That was the legacy that the Government sought to tackle, and we have done so incredibly successfully.
	My hon. Friend the Member for Stoke-on-Trent, South, (Mr. Flello) made an excellent contribution to the debate. He hit the nail on the head when he said that the issue here is the importance of fairness and equity and the idea that all taxpayers should fulfil their proper responsibilities as equal citizens of this country, wherever they live, whatever their income levels and whatever sector they work in. I agree entirely with my hon. Friend.
	I am pleased that the hon. Member for Twickenham (Dr. Cable) said up front that he supports the objectives that are set out in the Bill. He was right to talk about a spectrum of behaviour. However, I challenge the hon. Gentleman on one of his points. He said that this is not a moralistic issue, but entirely a practical one. I believe that people paying proper and fair levels of taxation is a moral issue in terms of the sort of society and economy that we want to be encouraging. The hon. Gentleman is right in saying that we cannot just have a moral approach. I accept that we must be very careful about the practical consequences. However, it is my view that we are dealing with a moral issue.
	The hon. Gentleman and others spoke about the retrospective nature of the proposed measures. Probably the best justification for retrospection is for me quickly to remind the House of what has happened year after year. In 1991, we had unit trusts. In 1993, there were gold bullion and tradable commodities. In 1994, there were diamonds and fine wine. In 1995, we had grants of options in third party companies. In 1996, there were own company share awards and options. In 1997, we had trade debt and restricted covenants. In   1998, there were conditional shares. In 1998 there were also readily convertible assets. In 1999, we had the exercise of options. In 2003, there were employee benefit trusts. There were also adjustable options. Also in 2003 there was national insurance contributions alignment to schedule 22 to the Finance Act 2003. In 2004 there was national insurance contributions alignment to sections 86 to 95 of the Finance Act 2004.
	All those examples reinforce the need to move in the direction in which the Bill takes us. Anyone considering these matters objectively, while understandably raising some concerns, would have to agree that on balancethe balance of judgmentthis is the right thing to do.

Philip Dunne: We have just heard for the second time from Ministers a list of the previous mischievous attempts to get around the tax and national insurance regime. However, that fails to deal with the issue of retrospection, about which my hon. Friends and I were arguing. We are talking about retrospective action from the point when the Bill becomes an Act, compared with the point when an announcement is made in the House. That is the period where there is   difficulty.

Ivan Lewis: My right hon. Friend the Paymaster General made a clear statement in December 2004. It seems to me that these measures should take effect from the moment when that statement was made on the basis that anybody who behaves in a particular way is aware of the consequences. The statement was absolutely clear. I believe that it is right, therefore, that the measures should take effect from the making of the   statement.

Richard Spring: The Minister is slightly missing the point. Of course he can make his point in defence of the remarks made by the Paymaster General. He has cited a string of efforts to clamp down on illegitimate tax activity, but he has not dealt with the question of retrospection. He is seeking to align the two. We are in new territory in the way in which things are being done. That is why care and sensitivity have to be extremely carefully defined.

Ivan Lewis: The hon. Gentleman can always rely on me to be caring and sensitive, particularly when responding to his points.
	It is a question of judgment. We are in new territory, and we have made the decision that that is where we should be in terms of the taxpayers and what the Government are entitled to expect in respect of our own certainty. We have heard a great deal today about certainty for others. It seems to me that the taxpayer, the Revenue and the Government are entitled to stability. We should never get ourselves into a situation in the House where we say that we all agree that avoidance is   unacceptable and then spend most of a debate trying to legitimise avoidance by saying that in some circumstances it may be acceptable. That cannot be appropriate.
	My hon. Friend the Member for Hartlepool (Mr.   Wright) made an excellent contribution, as ever. He made the point that this is not a party political issue at all. Previous Governments have moved repeatedly to close down loopholes. The right hon. Member for Hitchin and Harpenden (Mr. Lilley)a former Secretary of State in the previous Governmentmade several such decisions. My hon. Friend also underlined that this is about fairness. We must assure all our constituentswhatever their income or background, or wherever they livethat this country's tax system will treat them equally under the law. He was right to make that point.
	The hon. Member for Croydon, Central (Mr. Pelling) accused my hon. Friend the Member for Hartlepool of begrudging the City of London its success. My hon. Friend did not say that, but let us be clear that avoiding tax has nothing to do with the City of London's excellent reputation, of which every hon. Member should be proud. In fact, linking tax avoidance to the people who function in the City damages its reputation and is unfair to the vast majority of people who work to create wealth successfully there.
	The hon. Gentleman and many other hon. Members referred to the complex nature of the tax system. Much of the complexity in our tax system is a consequence of avoidance. We should be telling those who avoid tax as a matter of course that they need to change their behaviour and that they cause much of the complexity, although I am shocked that he could think that PAYE is complicated.
	The hon. Member for Ludlow (Mr. Dunne)in a usual, very cheap shotsaid that the Prime Minister had woken up to globalisation recently. That is an astonishing claim because, as I have said, the Government's whole economic framework is designed to put this country in the best possible position to respond to the perpetual challenges that globalisation throws at it. Our Prime Minister and our Chancellor have been leading the debate in the European Union and the international community about the need to be outward looking and to consider what is happening in India, China and the rest of the world, but the Conservative party has the cheek to suggest that, somehow, we have only recently woken up to those challenges.

Mark Field: The Prime Minister says all the right, warm words. Indeed, I very much agree with what he and the Chancellor have said in the past two years. I   wish that the Conservative party had made more of China, India and the importance of global competitiveness in our election campaign only in May. However, all this is, as ever, about implementation. Any   of those in business in China's large cities will say that Germany is the main European player in that market. The Germans have made significant headway in investing in joint ventures there. We need to put the money where our mouth is. In particular, I make a plea to the Foreign Office. A number of Foreign Office trade missions have been closed not just in Asia, but in Africa. I hope that there will be some reversal of that to ensure that such ideals are put in place.

Ivan Lewis: We politicians have just watched from a distance the political crisis in Germany, much of which is connected to the fundamental weaknesses and difficulties in the German economy. The German people and political classes would be delighted to have the economic framework that the Government have created in this country since 1997. Arguably, Germany has experienced some of those difficulties, yes, because of unificationwe must be fair about that, and a lot of   people are unfair when they forget to mention the unification of Germanybut also because it has been slow in some ways to face up to the realities of global economic change, and our economic policies have been based entirely on facing up to them.
	The hon. Member for Wimbledon (Stephen Hammond) expressed sadness that my hon. Friend the Member for Wolverhampton, South-West had not spoken in the debate. That sadness is shared by those of us on the Front Bench, and we look forward to his taking a similar role in Committee. The hon. Gentleman wants an assurance that our approach to the tackling of avoidance will be proportionateI can give him that assurancebut he talked about the cost implications for business. The message is simple: if business does not avoid tax, these anti-avoidance schemes have no cost implications.
	The hon. Member for West Suffolk (Mr. Spring) asked in his contribution whose judgment would be in play in these issues. It will be the House's judgment. Direct taxation is dealt with in the Finance Bill. National insurance issues are dealt with by affirmative resolution in both Houses. So the Government are certainly happy to take responsibility for those questions of judgment. He also asked meI am a bit puzzled by thisto write to him about a specific scheme that he referred to so that I can tell him what he is talking about. I should be delighted to tell him what he was talking about, and I will write to him about that specific scheme, although I do not recall its name.
	This has been a good quality debate on the whole and a good natured debate. There is consensus on both sides of the House about our responsibility and duty to have a fair taxation system and to tackle tax avoidance effectively. Clearly, we must debate a number of points in Committee, and I look forward to those debates. I   commend the Bill to the House.
	Question put and agreed to.
	Bill accordingly read a Second time.

NATIONAL INSURANCE CONTRIBUTIONS BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(6)(Programme motions),
	That the following provisions shall apply to the National Insurance Contributions Bill:
	Committal
	1. The Bill shall be committed to a Standing Committee.
	Proceedings in Standing Committee
	2. Proceedings in the Standing Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 17th November 2005.
	3. The Standing Committee shall have leave to sit twice on the first day on which it meets.
	Consideration and Third Reading
	4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
	Other proceedings
	7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.[Mr. Watson.]
	Question agreed to.

BUSINESS OF THE HOUSE

Ordered,
	That, at the sitting on Tuesday 1st November, notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on the Motions:
	(i) in the name of Mr Geoffrey Hoon relating to the House of Commons Commission;
	(ii) in the name of Mr Bob Ainsworth relating to the Parliamentary Pension Fund, the House of Commons Members' Fund and the Public Accounts Commission; and
	(iii) in the name of Mr Peter Lilley relating to the House of Commons Members' Fund (Discretionary Payments),
	not later than one and a half hours after the commencement of proceedings on the first Motion; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.[Mr. Watson.]

PETITION
	  
	Council Tax

David Kidney: I present a petition that is one of a series instigated by the IsitFair campaign about council tax, signed by 422 people from the Stafford constituency.
	The petitioners request
	that the House of Commons votes to replace Council Tax with a fair and equitable tax that, without recourse to any supplementary benefit, takes into account ability to pay from disposable income, such tax to be based on a system that is free from any geographical or politically motivated discrimination, and that clearly identifies the fiscal and managerial responsibilities of all involved parties.
	And the Petitioners remain, etc.
	To lie upon the Table

AFFORDABLE HOUSING (CUMBRIA)

Motion made, and Question proposed, That this House do now adjourn.[Mr. Watson.]

Tim Farron: I am extremely grateful for the opportunity to address the House on the subject of affordable housing in Cumbria. My constituents in Westmorland and Lonsdale have average incomes of around 16,000 per annum, with average house prices at about 200,000. According to the Government's assessment of an affordable homea home valued at three and a half times one's incomemy constituents would need to earn more than three times the local average in order to own a home in their area.
	For most local people in south Cumbria, buying a home is simply out of the question, but now a decent rented home is getting beyond the reach of most people. Last year, the local authority sold over 250 council properties, and at the same time roughly 130 new social houses for rent were made available by local housing associations. That is a net loss of 120 social houses   during the last 12 months, and that is the lowest net loss for many years, partly because the council is simply running out of council houses to sell.
	People who, had they been first-time buyers a decade ago, would have been able to afford a mortgage for a starter home, have absolutely no chance of doing so now. Those people do one of two things: they either leave the area or they enter the rented market, both of which have seriously damaging effects on our local communities. South lakeland currently loses 27 per cent. of its young people, never to return. Not only is that heart-breaking for local families, it is also disastrous for the economy and for society, stripping our towns and villages of talent and energy, reducing the skills base, reducing the birth rate, leading to falling school rolls and leaching the lifeblood from our communities.
	Those who stay and decide to rent find themselves joining a pressurised market. As the pressure on the market and the private rented sector grows, rents go up, pushing many more families into the social rented sector. But the amount of social housing is shrinking each year and the consequences of that are appalling. Families who, a decade ago, would have qualified comfortably for a council or housing association property are now dumped in substandard or inappropriate accommodation, waiting on a housing list for an eternity. In Kendal, the council is forced to offer young families hostel accommodation for months on end because there are simply no homes available.
	The human misery caused by this situation is immense. The impact on the physical and mental health of people caught in the trap is vast, and the effect on the children involved is unacceptable in any civilised society, and yet, of the 42,000 properties in my constituency, roughly 7,000 are not lived in. Some of those are holiday lets, which provide a valuable tourist income to our area, but most are second homes and are left vacant for much of the year.
	Excessive second home ownership pushes house prices even further beyond the means of local people and removes homes that would otherwise be, and indeed once were, in the hands of local families. The impact on our community of excessive second home ownership is crippling, because the loss of properties to the second home sector threatens the survival of local businesses, schools and public transport, as well as other services. Villages such as Satterthwaite and Lowick in my constituency have lost, or are soon to lose, their local schools because the houses that used to send children to those schools now stand empty for much of the year. Villages such as Bouth have lost their post office and others, such as Crosthwaite, face the same fate because the houses no longer contain local consumers.
	I do not want to focus any blame on people who have second homes, and I would not want to upset Labour Members, many of whom no doubt have second homes. I merely make observations about my constituency, where I have my home and where my constituents struggle in the face of a lopsided and increasingly inaccessible housing market. Local people do not resent second home owners; indeed, many who are classified as such are people who have purchased a home in my constituency with the intention of moving to it full-time once they retire. Those people will become fully fledged and wholehearted members of the community in time. I   encourage them to hurry up and join us as quickly as possible, because their local post office, church and bus service need them.
	My constituency is among the most picturesque in England, and one might say, If you can afford to have a home there, why shouldn't you? The answer is simple. We welcome people to Cumbria, including those who have second homes. I have no desire to demonise those people at all, but I am not a supporter of the unfettered free market; neither, I suspect, is the Minister.

Mark Williams: Is my hon. Friend aware that my local authority area, Ceredigion, is the least affordable in Wales in which to buy a home, and that comparisons between Cumbria and Ceredigion are marked, with the lowest average wages in Wales coupled with the highest prices?

Madam Deputy Speaker: Order. I appreciate that the hon. Gentleman has referred to Cumbria, but this debate is about affordable housing in Cumbria, not in Wales.

Tim Farron: My hon. Friend is right to draw attention to the fact that affordable housing is a problem throughout the country, particularly in rural areas. We fear that some of the concerns in rural areas across the United Kingdom, especially in Cumbria, are being overlooked by the Government in their attempt to tackle the issue of affordable housing.
	Adam Smith may have been a Liberal, but he was nevertheless wrong in this respect: no invisible hand is in evidence to correct the faults in this marketit is up to society to employ its visible hand to correct imbalances, to protect true freedom, and to ensure fairness.
	The Minister may be interested to hear that in the past six months I have had two letters from second home owners ticking me off for my stance on this issueI do not think that either was from the Minister's neighbour, the right hon. Member for Oldham, West and Royton (Mr. Meacher). I said to them, and would say to any second home owner, that I fully recognise the liberty to purchase a second home, but respectfully point out that the right to have a decent first home is a much more important liberty.

Danny Alexander: Does my hon. Friend share my concern that the proposed Government regulations on self-invested personal pensions, which are due to come into force on 1 April next year, will have a dramatic impact on the demand for second homes in Cumbria and in my constituency?

Madam Deputy Speaker: Order. I remind hon. Members, as I did a few minutes ago, that this debate is about affordable housing in Cumbria.

Tim Farron: I am grateful to my hon. Friend for raising that important point, to which I shall turn in a moment.
	It is important to recognise that there are competing liberties herethe right to have a first home and the right to have a second home. When it comes to a competition between those liberties, and at times it does, I am certain about which side of the fence I am on. It is important that the primary right is to a decent and affordable first home for people and their families. Second home ownership can bring some benefits to an area but a balance needs to be struck.
	How do we achieve that? The Government could put a cap on the second-home market in those parts of   Cumbria where it is agreed that the proportion of second home ownership is excessive. They could do that   by introducing a new planning law that would place turning a first home into a second home in a formal   category of change of use. In parishes where second-home ownership exceeded an agreed limit, the planning authority's default position would be to refuse any application for a change of use.

Daniel Rogerson: I welcome my hon. Friend's comments on planning. Does he agree that there is also an opportunity for dwellings that are currently second homes, when resold, to be brought back into use as first homes through that planning mechanism?

Tim Farron: Yes. I am grateful to my hon. Friend for making that point. Clearly, the Government could build such a provision into the mechanism. That would be helpful. It is important to examine the possibilities and be pragmatic. It is not beyond the Government's wit to draft enforceable legislation and guidance on the matter.
	Another way in which to affect the housing market positively would be to build on the Government's encouraging recent work of granting local authorities permission to charge second home owners up to 90   per   cent. of the full amount of council tax. The position is much improved. The previous Conservative Administrationrepresentatives of which are scarcedeliberately granted a 50 per cent. council tax subsidy for second-home owners when they introduced the council tax in 1991. It is a great shame that no Conservative Members are here to intervene and put me right should I be wrong. It was a reprehensible act, which redistributed wealth from the hard-working many to the privileged few.
	I urge the Government to abolish the remaining 10 per cent. relief to second home owners and to examine the possibility of introducing permission further to increase council tax for second home owners in areas where there is deemed to be an excess of second-home ownership. Such a measure would reduce demand for second homes, although, realistically, it may not make a vast difference. More important, it would provide local authorities with the wherewithal to fund new affordable housing schemes.
	The communities of south lakeland are well aware of the Government's plan, which has already been mentioned, to introduce new pension rules from April 2006, to give tax relief of up to 215,000 to individuals who invest in a second or third property and place it in their personal pension. They also know that the change will have disastrous consequences for our area, providing another incentive for purchasing second homes and further heating an already overheated market, thus leaving local families who are searching for a home in an even more desperate position.
	With one in six homes already beyond the reach of local families, how much worse will the position be for Cumbria's towns and villages when the new pension rules are introduced? How many more local young people and families will be forced to move away from the area that they call their home as a result of the proposal? How many beautiful lakeland villages, which so many hon. Members have visited on their holidays, will become moribund ghost towns, bereft of a living, working community?
	The Lake District and the Yorkshire Dales national parks are in my constituency. For those national parks to remain valuable centres of peace and recreation for the nation, the communities in them must not be allowed to die, replaced by weekend havens for the   well-to-do. The national parks were set up as accessible assets for the nationfor the people of this country. To contribute towards the parks' becoming available only to a minority flies in the face of the national park ideal, with which the Labour party has often closely aligned itself.
	I am sure that the Government did not intend to damage rural communities through their pension plans. However, the proposal's unforeseen consequences will be appalling. I ask the Minister to confirm in his response that the Government will abandon the proposed change in the pension rules.

Danny Alexander: Does my hon. Friend accept that the consequences are not totally unforeseen because Liberal Democrat Members have raised them not only in the past few months but in the past couple of years? Despite the assurances from the Treasury that such consequences will not ensue, the aggressive marketing campaigns of many companies to promote those products suggest that they could ultimately be worth several billion pounds.

Tim Farron: My hon. Friend makes an excellent point. Perhaps I was being a little too generous, and gentle, to the Government in the hope of coaxing something out of them.
	I suggest that, if the Government are seeking to stimulate saving and investment, they might instead offer tax credits for investment in affordable housing developments. The benefits of such a move would be many and, importantly, they would be shared. Such a scheme would provide a return for investors, a boost to the supply of affordable homes, and a contribution tothe achievement of Government policywhich would be no bad thing, I am sure.
	While I am in the mood for making suggestions, may I say that I would be grateful if the Government actively encouraged the sustainable development of affordable homes for local people within the national parks? The   Yorkshire Dales national park, for example, has won plaudits for its work in ensuring the development of   affordable homes for local people and in flexibly   interpreting its planning and conservation roles, employing much-needed common sense in response to local needs. Such good practice should be spread to other national parks, with the Government's proactive support.
	My neighbours and fellow residents in Westmorland and Lonsdale face average house prices that are 13 times higher than the average annual wage. This is not untypical for rural areas such as ours, as my hon. Friends have pointed out. The Government's support for the development of new affordable housing, for purchase as well as for rent, is welcome, as is their support for shared ownership schemes and for the provision of local occupancy clauses in affordable housing developments.
	However, I have two concerns in that respect. The first is that the term affordable seems to have been stretched beyond all credibility. New properties on sale for upwards of 120,000 are being presented as affordable housing, but I can assure the House that, for most of my constituents, that amount is definitely not affordable. Secondly, local occupancy clauses are far too easily abused and thwarted. I have come across many examples in Grasmere, Windermere, Coniston and Ambleside of buyers who, technically, meet the criteria for local occupancy, but who have purchased property and let it for commercial purposes, rather than for the provision of affordable housing to local families. I hope that the Minister will take notice of my early-day motion calling for more effective enforcement of local occupancy clauses.
	In closing, I observe that the term affordable housing has now fully entered the Government's lexicon, and I am grateful for that. However, the problem is that too much housing in Cumbria is unaffordable, and too much of it is unoccupied. That situation is not inevitable, however, and it is certainly not irretrievable. It is within the grasp of society to affect this situation, and to remove the appalling pressure on local families. The Lake district and the Yorkshire dales, which I represent, are often described as the lungs of England. I call on the Government to take action that will benefit the communities that populate those lungs, to allow them to breathe more easily.

Phil Woolas: I should like to start not only with the traditional congratulations to the hon. Member for Westmorland and Lonsdale (Tim Farron) on securing this debate, but with very genuine congratulations. He has raised this issue in his maiden speech, in two letters to the Office of the Deputy Prime Minister, in his early-day motion, in a press release this afternoon and in this Adjournment debate, and I congratulate him on his campaign. I agree with much of what he has said, and I commend him in other ways as well. I commend him for his election result, which we all watched with interest, and I am happy to commend him for his Lancastrian roots. However, I have to disagree with his choice of football team. I am afraid that he is a Blackburn fanwhich is a little way down the road from my own home townbut he cannot be perfect.
	The hon. Gentleman has raised some important questions in this debate. I want first to set out the national approach, and then to consider the situation in Cumbria. I shall then try to address some of the specific points that he has raised. It is well known that the Government are committed at national level to addressing the need for more affordable housing. The background to the problem is deep rooted and long standing. Let me give a couple of statistics. Over the past 30 years, the number of households has increased by 30 per cent., but in the same period the number of new homes built has fallen by 50 per cent. That has widened the gap between demand and supply, so there is little wonder that the long-term house price trend is so much higher in this country than in others. That, of course, is set out in the Barker report, which is extremely important for the Government and for the country.
	On the supply side, we have, as is known, a strong strategy to increase housing supply, which is set out in the communities plan. Much public comment has been made on that plan delivering results in London and the south-east. I should put it on the record that there was a 36 per cent. increase in the number of new homes being built per year between 2001 and 2005, combined with increased densities in house buildingit is important that that is achievedand a significant increase in re-use of brownfield sites. There are those who say that the policy is to build over England's green and pleasant land, but that is a clich that perhaps makes for an easy headline and it is not borne out by the facts. The hon. Member for Westmorland and Lonsdale has not accused us of doing that, although others have.
	This policy is addressing one cause of the affordability problem, which is that, over several decades, we simply have not built enough new homes. The underlying reasons for the increasing number of households are well known and they include more single people and longevity. Let me again put it on the record that Government policy is in favour of longevity. This is a good thing, not a bad thing, but it presents us with some difficulties.
	On the other side, however, a range of measures are necessary in addition to a stable market and increasing supply. Since 1997, we have doubled the investment in affordable housing for rent or purchase, and 5 billion will have been spent over the three years to 2006. That investment will support the delivery of our new range of simpler, more affordable, more accessible home ownership schemes.
	In the short term, through our new homebuy scheme, we will help more than 100,000 householdsthat is a lot of people, not just 100,000 of the populationto own their own home by 2010. Homebuy will provide a flexible shared equity-based product, which will increase access to home ownership for those priced out of the market. It will also provide opportunities for social tenants to buy a share in their home. Homebuy will reinforce the longer-term strategy by increasing home ownership opportunities for key workers and other first-time buyers now.
	Empty homes are also a factor in contributing to an adequate supply. Over the last decade, the number of vacant dwellings has dropped by nearly 180,000, but there are still 690,000, according to the latest figures, which are from 2004. There remains more to be done, which is why we have recently provided local authorities with a new weapon in their armouryempty dwelling management orders. I would encourage all hon. Members to pay attention to this bit, because their advice surgeries will be full of complainants, such as landlords who have been abusing their position, who want their help.
	Empty dwelling management orders support the efforts of local councils to get empty dwellings back into use. There are also tax incentives to support the use of space above shops, the conversion of properties and the renovation of properties that have been empty for three or more years. I hope that there is support for the orders across the House, although it impossible to say whether the official Opposition support them. They have probably gone to their second homes, and I hope they are paying 90 per cent. council tax on them.
	Many initiatives focus on the urban areas where key workers and first-time buyers have found it difficult to find affordable housing, but rural areas have not been, and will not be, overlooked. Current schemes are designed to be flexible enough to respond to the needs of rural communities as well as urban ones. Second homes, for example, are often of particular concern. We have heard the stark statisticsI pay tribute to the hon. Gentleman for putting them on the recordand other rural areas face similar problems.
	Since last April, councils have had the option to reduce the 50 per cent. council tax discount on second homes to a minimum of 10 per cent. We understand that many authorities have chosen to do sowe are not saying that councils must do so, but they have that choice, depending on their local circumstances. I wish that some of the newspapers that, under the Freedom of Information Act 2000 introduced by the Government, report the allowances of Members of Parliament, would point out that those of us who have second homes in fact voted to increase our own taxes quite substantiallyI   am not sure whether all Members realised what they were doing at the time. It is perhaps not a flippant point, Madam Deputy Speaker, and I have wanted to put it on the record for over a year now. I thank you for allowing me a wide berth on that.
	To return to the debate, the Rural Affordable Housing Commission, established jointly by the Deputy Prime Minister and the Secretary of State for Environment, Food and Rural Affairs, is now examining issues, problems and solutions across the country in rural areas, and will make recommendations based on good practice. Elinor Goodman, chair of the commission, was at a well-attended seminar in Keswick last week as part of the Commission for Rural Communities' housing inquiry. The hon. Member for Workington (Tony Cunningham), whose constituency is affected by this debateand who, I am delighted to see, is in his placesays that he was delighted to see that, and I welcome his support.
	The hon. Gentleman made a point about self-invested personal pensions, on which there were a couple of interventions. I believe that there is a deep misunderstanding on this matter. He referred to an unintended consequence of my right hon. Friend the Chancellor's policy. I must tell the House that very little, if anything, that my right hon. Friend the Chancellor does is unintended or not thought through. There are limiting factors in relation to SIPPs. We do not believe that the transfer of a pension fund into property will have the negative impact to which he refers. People who go for SIPPS and see property as a form of investment are a tiny minority. Under the scheme, one does not buy a second home as part of one's pension and use that second home as a holiday home or whatever; the property is owned by the pension fund, and any call on that property is paid out of the pension fund.
	Of course, the hon. Gentleman will raise the question of enforcement, which is an important point, but we do not believe that the concept of SIPPs will lead to the sort of consequences that he and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) fear. Responsible financial advisers and other commentators are making it clear that SIPPs is likely to be an attractive option only for a minority and will not produce substantial changes in behaviour.
	Let me turn to the meat of the debate. Clearly, Cumbria is one of the most beautiful parts of our countryit is not the most beautiful constituency, but it might be the second most beautiful[Interruption.] Perhaps it is the third most beautiful. I shall not start a bidding war.
	It is clear that unique challenges are involved in trying to provide affordable homes for local people in the Cumbria area. Owing to the attractiveness and quality of life on offer in the Lake district and surrounding areas, demand for housing is extremely high, much of it coming from outside the immediate area. The link between local income levels and the cost of housing has been broken. and for many years local people have struggled to find a place on the property ladder.
	The Government have been concerned for some time about the position in Cumbria and are committed to doing what they can to help. My right hon. Friend the Deputy Prime Minister has taken a personal interest in the matter, and has met local stakeholders twice to listen to their concerns and recommend new approaches to tackling the issue. That reflects his long-standing personal commitment to the Lake district and its surroundings.
	Since those meetings, the Government office for the north-west and the Audit Commission have been working closely with local authorities and registered social landlords in Cumbria to promote a more strategic approach to affordable housing provision. As a result, a group of the county's local authorities known as the Cumbria strategic housing group have succeeded in attracting an additional 4 million from the North West Regional Housing Board for 200506 specifically for the provision of new homes in the area. That reflects the   high priority that the board gives affordable housing provision in the new regional housing strategy, and is in addition to the mainstream Housing Corporation investment of over 20 million for new affordable housing in Cumbria in 200406.
	No one is suggesting that local partners have been inactive. For example, South Lakeland district council has dedicated its increased council tax receipts from second home ownersa consequence of the change on   which the hon. Gentleman was gracious enough to congratulate the Governmentto the provision of affordable housing. As a result, the council expects to invest around 950,000 this year in a variety of schemes, including funding for the improvement of properties and their conversion to affordable housing for rent.
	However, although finance is clearly important, this is not simply an issue of public funding. The new planning policy statement 3 on housing, due to be published for consultation shortly, will strengthen our ability to provide affordable housing through the planning system. That is a postcard that the hon. Gentleman can take home with him. Officials at the Government office for the north-west have been working with Cumbrian local planning authorities, encouraging them to make the maximum use of existing planning powers to secure affordable housing.
	The forthcoming joint structure plan for Cumbria and the Lake district proposes a new policy requiring 50 per cent. of new homes built outside the national park area to be affordable, and 100 per cent. of new homes built inside the national park to be secured in perpetuity either for occupation by local people or as social housing. The structure plan also proposes to introduce the concept of allocating sites specifically for social housing in the national park. This is the first time that that approach has been adopted in Cumbria. It extends the existing rural exception sites approach, which is a familiar route for the provision of new affordable housing. The revised structure plan is due to be adopted in January 2006.
	We should not focus entirely on new housing. The Government's commitment to providing decent homes by tackling the huge backlog of under-investment in our housing stock is also having a significant impact in Cumbria. Additional public sector investment of 21 million has been supplemented by a further 85 million of private sector investment. That has helped to ensure that by 2010 Cumbria's social rented housing will meet the decent homes standard.
	I hope that the hon. Gentleman, the hon. Member for Workington and other Cumbria Members with a direct interest will welcome the joint structure plan.
	The hon. Gentleman asked whether we could find ways to change planning law and to provide a cap. As I   said, the new policy consultation will propose some changes. I am not sure that his scheme is workable, but I invite him to respond to the document.
	The Government and the regional housing board are only too aware of the need to continue our push to   provide affordable housing in Cumbria. We need to maintain sustainable, balanced, mixed communities where people on lower incomesespecially the young and the oldcan access local housing at reasonable cost. The longer-term impact on local services and the rural economy will be severe if people on even average incomes are no longer able to afford to live and work in   those communities. We are committed to a varied set   of actions to address what is undoubtedly a complex   issue. With the help of local partners, the regional housing board, the Housing Corporation, local planning authorities and others, I am confident that we can continue to deliver real progress for the people of Cumbria.
	Question put and agreed to.
	Adjourned accordingly at eleven minutes past Three o'clock.